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Its coffers still full from last year’s sale of the Los Angeles Times, Chicago-based Tribune Publishing announced Thursday it will pay a special cash dividend of $56 million to shareholders.
It will be the first dividend paid to shareholders since Tribune Publishing spun off in August 2014 as a stand-alone company and significantly shrinks a cash pile that made it both a potential buyer of other media properties and an acquisition target.
The company, which owns the Chicago Tribune and other major newspapers, had $98.2 million in unrestricted cash at the end of the first quarter, according to financial reports. Between the upcoming dividend payment and other recent expenses, the projected cash balance would be about $25 million.
“Over the past year, we have taken advantage of opportunities to sell assets at favorable prices,” David Dreier, chairman of Tribune Publishing, said in a news release Thursday. “The payment of a special cash dividend underscores the company’s financial strength and commitment to returning capital to shareholders.”
Tribune Publishing completed the $500 million sale of the Los Angeles Times and San Diego Union-Tribune to biotech billionaire Patrick Soon-Shiong in June, leaving it a smaller but virtually debt-free company.
The dividend of $1.50 per share, approved by the Tribune Publishing board Wednesday, will be paid on July 2 to shareholders of record as of June 12.
“This is a way to make shareholders short-term happy,” Douglas Arthur, a media industry analyst with Huber Research, said Thursday. “Nothing more, nothing less.”
Michael Ferro, who stepped down as non-executive chairman last year but remains the company’s largest shareholder, would receive a dividend payment of about $13.6 million. Ferro owns nearly 9.1 million shares, or 25.3% of the company, according to regulatory filings.
Soon-Shiong, Tribune Publishing’s second-largest shareholder at about 8.7 million shares, or 24.4% of the company, would receive about $13.1 million.
Tribune Publishing has been involved in merger negotiations with a variety of suitors since Ferro, a technology entrepreneur who previously owned the Chicago Sun-Times, became the newspaper company’s chairman and largest shareholder in February 2016.
In 2016, McLean, Va.-based newspaper publisher Gannett abandoned a six-month takeover pursuit of Tribune Publishing, then known as Tronc, after funding dried up for the escalating bid. More recently, Tribune Publishing terminated negotiations in December to sell the newspaper chain to California-based McClatchy Co.
Multiple industry sources have said there have been renewed merger discussions this year between Tribune and other newspaper companies, including Gannett, which earlier this month fended off a hostile takeover bid by hedge fund-backed Digital First Media. On Thursday, the Wall Street Journal reported that Gannett recently held merger talks with GateHouse Media.
Tribune Publishing spokesman Tilden Katz declined to comment on speculation regarding potential mergers.
The urge to merge comes as the newspaper industry faces secular revenue declines and a challenging transformation from print to digital platforms.
Tribune Publishing’s clean balance sheet is “unusual” in the newspaper industry, and makes it a potentially attractive merger partner, Arthur said, but the large cash dividend may mean there’s no deal in the works.
Tribune Publishing also owns the Baltimore Sun; Hartford Courant; Orlando Sentinel; South Florida’s Sun Sentinel; the New York Daily News; the Capital Gazette in Annapolis, Md.; The Morning Call in Allentown, Pa.; the Daily Press in Newport News, Va.; and The Virginian-Pilot in Norfolk, Va.
Tribune Publishing’s stock closed up 6.6% Thursday to $10.19 a share, one day after hitting a 52-week low of $9.52 a share. Shares of Gannett closed at $7.75 a share, up 1.57% while The McClatchy Company rose 18.1% to close at $2.48 a share.
Twitter @RobertChannick