A put-up -- or shut-up -- moment for our owners

Microsoft did not pay its first public stock dividend until 28 years after Bill Gates co-founded the software giant. Google still does not pay dividends, 10 years after its start. If Facebook goes public, once the capital markets are restored, it will not pay a dividend for many years afterward, either.

These companies are all in technology, the same industry CEO Craig Dubow has said is Gannett's future, as it is transformed into a digital news and information network, from an Old Economy newspaper manufacturer.

In all start-ups, but especially those in technology, every penny of profit must be plowed back into research and development, into hiring the best engineers available, so the venture can scale up as quickly as possible. There isn't a second to waste. This is Start-up 101 -- a subject I reported for most of eight years, covering entrepreneurs and venture capital on USA Today's tech-news team.

For directors, a watershed moment
I write this as Gannett's board of directors is believed to be debating an unprecedented reduction in the dividend -- the first such cut, if approved, since the company began paying dividends to public stockholders in 1967.

Pushed to the wall by the growing credit crisis, this board may finally go on record, answering a central question: Are Gannett's principal stockholders -- AXA Financial, Brandes Investment, and the rest -- genuinely committed to GCI's future?

I have long questioned Corporate's investment in real transformation, precisely because the dividend policy never changed -- other than its yield rising ever higher. In practice, Dubow's version of transformation was little more than rearranging the deck chairs. Dubow may never have said precisely that Gannett was in start-up mode. No matter -- that's exactly where the company must be: on start-up footing, with a capital structure reflecting that fact.

In other words, if the board does anything less than suspend the dividend, we remain mired in the vicinity of fantasyland -- i.e.: a 43% yield at today's closing stock price: $3.75, down 8%.

Continuing to demand dividends has meant one thing: our owners did not believe in Gannett's ability to transform into a viable technology company. If they thought otherwise, they would want to spend all their profit on making sure the company got the best launch possible. We are now at a put-up or shut-up moment.

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