Saturday, October 25, 2008

Sounds like Martore is signaling a dividend cut

"When you look at our share price, we are clearly not being paid for that dividend."

-- Chief Financial Officer Gracia Martore, in response to a stock analyst's question yesterday about a possible dividend cut.

I've just re-read a transcript of yesterday's third-quarter earnings teleconference, and I'm left with the impression a dividend cut is more likely. That's hardly surprising: The yield is now 17%. Following are exchanges between Martore and media stock analysts.

Q: Do you have discussions around the dividend, and would you change the dividend?

Martore: I think given the current credit crisis and the economic backdrop, as with all companies in the United States, frankly, we are evaluating our capital allocation. We’ve discussed it, we will continue to discuss it with the board. We are going to weigh it against having flexibility within our balance sheet, while at the same time doing the right thing by our shareholders. But obviously when you look at our share price, we are clearly not being paid for that dividend at this point.

Q: Is that on the table in terms of cutting the dividend?

Martore: You know, as we’ve said, we talk with our board on a regular basis about capital allocation. We will be meeting with them next week and we will meet with them again in December and certainly our dividend, share repurchases, debt, our balance sheet, will all be topics of discussion.

Please post your thoughts in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Seeking Alpha]


  1. You know, it's not the worst idea in the world. Cut the dividend in half or less. Share price drops by 50%. Whoopee, what's another $5 gone?

    But look at what that does in terms of balance sheet. Opens up a HUGE amount of cash for acquisitions - hopefully not just more nebulous two-word-CapitalizedName-tech companies, but perhaps smaller papers that have strong profit margins in small communities.

    Obviously, buying another Detroit or Phoenix would be stupid. But strong 20k subscriber papers in communities without strong local internet presence? There's definite opportunity there to build both sides of the business.

  2. Would also free up a bunch of cash for severance packages and golden parachutes, should a "change of ownership" take place.

  3. Or the company buys back stock at the low price. Cutting dividend could be more palatable if the investors see less shares out there.

  4. for what it's worth, Gannett seems to be going to more of an IAC model for the digital properties. buying more newspapers probably does not make sense. purchasing companies that extend their reach beyond one individual market is where things are going. you compete more but you have the potential for much broader reach. this means requires high quality, market leader properties though which are both tough to find or to develop.

  5. Is it just me, or did she say the same thing twice in the same corporate-ese??

    Why can't anyone answer a question with a simple yes or no these days??

  6. I noticed the same thing, 9:35 a.m.


Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

Note: Only a member of this blog may post a comment.