Why CBS’ Moonves Should Cut Dividend
February 12, 2009 12:04 PM
Next week CBS CEO Leslie Moonves will report earnings, and I wouldn’t be surprised at all to see a hefty dividend cut for shareholders.
And that’s a good thing, considering the company’s cash flow is dropping due to the continuing downslide in ad sales.
Today CBS was trading at $5.60, just shy of the bottom of its 52-week track record ranging from $4.36 to $25.83.
That’s nearly a 19% yield, or what the street calls an “accidental high dividend yielder,” because the lower the value of a share of the company’s stock, the higher the yield on the dividend.
In press reports in December, Moonves said he had every intention of paying a solid dividend, but that he would do whatever is necessary to keep the business flowing. It’s time, Les.
Just yesterday, Sinclair Broadcast Group announced it was suspending its dividend, following many companies outside the media sector that have taken that same step earlier in the year.
Now it’s time for Moonves to step up to the plate and do the right thing for his ailing business model.
Taking that step, according to today’s Wall Street Journal, would eliminate $752 million in dividend payouts and put the money back to work on the company’s ledger sheet.