McClatchy the First Publisher to Cancel Dividend Payments
McClatchy has announced that is suspending paying dividends to its shareholders, so it can focus on paying existing debt. For shareholders this appears to be a bittersweet deal. On one hand, you feel comfortable knowing that there is a heightened sense of corporate responsibility, but on the other, you’ll have to come to grips with the fact that you’ll miss your dividend check this time around.
McClatchy is working on paying down a $2 billion dollar debt, which they attribute to their Knight Ridder purchase that was made three years ago. (I largely doubt that the Knight Ridder purchase is solely to blame for the debt, as most publishes are experience a high debt ratio ‘sans’ acquisition). Either way, this is the second stab at dividend payments we’ve seen from this publisher, as a few quarters ago McClatchy cut dividend payments to its shareholders in half!
It will be interesting to see if other publishers (newspaper/directory) take McClatchy’s lead. I think shareholders have the propensity to be far more understanding during a trying economy and as a result, if a newspaper were to move to cancelling out dividend payments, now would be the time.
For reference, McClatchy is the third largest US newspaper publisher and a few of their nameplate papers are the Sacramento Bee and the Miami Herald.