"Today's decision provides the company with additional financial flexibility given the current economic environment and the uncertain business outlook," said Arthur Sulzberger, Jr., chairman, in a statement. "We expect the suspension of the dividend, coupled with our other actions, will help us decrease debt and improve the liquidity of the company, a difficult but prudent measure in this operating environment."
It's economically sound for the cash-strapped company, although it won't make the stockholders incredibly happy. Especially the Sulzberger family members who were living the easy life off that dividend money. Now their company actually has to make money in order for them to make money! Joe Hagan wrote in New York last fall:
Sulzberger and CEO Janet Robinson raised the dividend by an extraordinary 31 percent last year-even as the stock price declined. Of the $132 million a year the paper gives to shareholders, about $25 million of it now goes directly into the coffers of the Ochs-Sulzberger trusts.
That's all gone, and the company needs every penny it saves to pay down debt. Henry Blodget points out that a share of NYT stock is now cheaper than a Sunday copy of the paper. Time for the young Sulzbergers to get to work. At least one of them has a job. For now. [AP]