Reducing the payout would conserve capital, helping keep Gannett liquid during a time when revenue is falling rapidly, and credit is scarce. But it would likely send the stock price even lower. Shares are already down nearly 30% since Jan. 30, when Chief Financial Officer Gracia Martore (left) told Wall Street analysts "the next time the board has to act on the dividend is in February."Today, I was told that Feb. 25 is the actual meeting date. I don't know whether this is a multi-day meeting, however, so it's unclear when the dividend might be discussed.
'Significant conversation' expected
Gannett's shares closed yesterday at $4.06. The dividend yield is now a crazy-high 39.41%, pressuring directors to take action.
The possibility of a dividend cut surfaced Jan. 30, during the fourth-quarter earnings teleconference call. Responding to a question, Martore said "there will be significant conversation" about the dividend during the board meeting, "in the context of where credit markets are, where the economies are, and where cash conservation comes into play across the country,'' according to Seeking Alpha's transcript. "So we will take that up with the board again in February and we will act appropriately."A Gannett Blogger who doubts directors will reduce the payout says the dividend has never been cut in the more than 41 years since the company went public, Oct. 24, 1967. (Corporate's online dividend history only goes back to 1995.) The first dividend was $.0542 per share; it's now 40 cents per share quarterly.
Can anyone else confirm the Feb. 25 date -- and add details? Please post replies in the comments section, below. E-mail confidentially via gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.
bull crap...wake up...it's coming quicker than you know.
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ReplyDeleteThe market cap is $989 million, which means you could take control of the whole company -- all 90 papers, the TV stations, USA Today, Cars.com and CareerBuilder.com -- for around $500 million. It seems like a good deal.
ReplyDeleteCBS cut its dividend on Wednesday.
ReplyDeleteIt can be done. CBS didn't fail overnight. Its stock is running around $5, not much higher than Gannett's.
I don't know much about big business, but in layman's terms, can anyone explain to me whether it is feasible that Gannett will disappear anytime in the next year or two? I mean how bad are things really? I know some people on here want to see Gannett go away, and others have a more measured opinion, but can some explain what the facts are and what similarities might exist in Gannett's situation that compare and have led other companies to being bought out or going away in some manner? How close is Gannett to the edge, and why is that so? How much did the building of the Crystal Palace, for instance, factor into the company's downward trend? That's some pretty prime real estate for a company that in theory could have been located anywhere. Never seemed like a wise move to locate there. Seemed more like an ego-driven venture than smart business. How about USA Today, does that one newspaper, and its relatively high-paid staff add to the company woes? Just curious. Not making judgment. I really just want someone to speak factually about these things.
ReplyDeleteIt is feasible that GCI could disappear as you put it. Not likely, but feasible. The central problem I see is the $6 billion debt. Assuming a 6 percent interest, and corporate needs to find $360 million each year to service the debt. The trouble is that this is a closely integrated company. For example, I don't think USAT is viable without the community newspapers providing the printing services. If the community newspapers go away, corporate would have to find presses to print USA Today, or cutback to the major cities. They also could reduce USAT's payroll by 15-20 percent without hurting the product. There is a lot of well-paid dolts working there. There is a lot of overhead corporate added in the move from Rochester to McLean that is now dead wood, and in need of severe pruning. As for the Crystal Towers, it was a waste of money, but probably built with tax write offs in good times. Of course, you have to have the taxes in the first place before you can have write-offs, and that is the big problem now as I would suspect half of the papers are running unprofitably. Newspapers coin a lot of money in good times, but in bad times the costs of all that metal and manpower is a real drag.
ReplyDeleteThe "Crystal Towers" were a cheaper alternative than the rent extortion going on at the old Arlington HQ.
ReplyDeleteThe Crystal Towers might have been cheaper than rent in Arlington, but why be in expensive Northern Virginia at all? Why not build more modest towers on more modestly priced land in say, Kansas? I just see an extravagance in those towers that stinks of arrogance, ego and greed, not to mention a lack of vision in preparing for hard times.
ReplyDeleteI am surprised the towers themselves don't get talked about more on here. They, and everything in them including the blue ball, are symbolic of a company that didn't show much fiscal restraint. And now the average working Joes are paying the price.
It's funny, when people lose jobs and have to belt tighten, they don't throw their kids out out of the house. They find cheaper ways to live and/or find a less expensive house. Gannett, on the other hand, throws people overboard first. Why not put the blue ball on eBay and save a few jobs? That sculpture cost well into the six figures, right? And it's just one of many unnecessary luxuries of that GCI campus.
The way I see it, GCI bought a house and can't afford now, but is stuck with it. Sounds like what's happening residentially, eh?
@11:13 a.m. RE USA Today, you clearly have no idea what you're talking about. It makes money and has a circulation and advertising model that is less susceptible to the current economic problems than virtually any other paper. Re Gannett as a whole, who would buy it? No one is getting credit now. No one can raise that kind of money. Finally, how much can the dividend by propping up the stock price? At more than 30%, it's a better deal than investors can get anywhere. If the stock was three times the price, the yield would still be the best deal on the street. But the stock price keeps dropping.
ReplyDeleteJim --
ReplyDeleteCutting the dividend is a sign that things are bad. But things are bad all over. Other companies are doing this too. The economy sucks.
I guess I just don't understand the tone that by doing this the board is doing something they shouldn't be doing. Or that there is something underhanded about it. When times are tough, tough measures have to be applied.
Don't get me wrong, I am a supporter of both you and this site. But if what they are doing is wrong, what would you suggest happen to keep the company viable?
1:29 PM
ReplyDeleteWhat tone are you talking about? In fact, are you saying the dividend situation shouldn't have been a blog entry put up for discussion?
Thanks.
11:48,
ReplyDeleteThe rent issue is partially true, but the bottom line is that the big boys who made the decision to move to McLean, most no longer there, already lived minutes away in multi-million dollar homes close to the Crystal Palace site.
Commuting to Arlington was too much for those suits, and most of the suits there today live in those tony neighborhoods as well.
Talk about a waste of money and telling employees that they looked at 50 sites before selecting that one. GCI wanted to make a fashion statement by building the most lavish, outrageous complex in a horribly expensive, congested, inconvenient area with far more space and acreage than it ever needed.
It may look impressive from the outside, but inside, it's one of the most ugliest, coldest, depressing places I've ever worked. In Rosslyn we had the most beautiful views of VA and DC; here there's nothing to look at.
The Crystal Towers look great on the annual report, but the complex is now horribly crammed in by nearby development. Capital One was doing a massive expansion of its footprint, as is neighbor but now bankrupt Freddie Mac. It looks like a suburban industrial slum now, and it will get worse when the Galleria goes belly up, federal regulators seize Capital One, and Freddie disappears. I don't think it would sell for 20 cents on the dollar paid for it.
ReplyDeleteIf pension money is wrapped up in company stock, wouldn't cutting or suspending the dividend put the level of retirement plan (pension) underfunding that much deeper?
ReplyDelete