The family trust that owns the Toronto Star -- the second and third generation heirs of the executives who took control of the paper in the 1950s, after the death of "Holy" Joe Atkinson -- has tossed out former U of T president Robert Pritchard and installed one of its own as chair of the board of TorStar.
TorStar also cut its rather rich dividend. This will come as some solace to the reporters in Kitchener, Guelph and Hamilton who were laid off this week by TorStar. They, and the journos already forced out of the company, will be thrilled TorStar's papers increased their profitability, and that all the losses came from the board's bad investment in a convergence play, CTVGlobemedia. Now, my question is this: does the person who recommended this investment and the people who approved it still work at TorStar?
The company's stock is now trading at about $5.50. If it had stuck with its old dividend, TorStar shareholders would have been getting a return of about 14%. In the real world, that would have driven the stock up, probably well over $15. Even now, the reduced dividend is about 7% on investment, meaning this stock should still be a really good investment at $10. But, of course, these are not reasonable times.
Now, you might ask yourself why a media company that claims to have lost more than $200 million and has gutted its newsrooms would be paying a dividend to anyone in this time of recession. You might ask yourself whether the money might have been used better as a reserve for the, um, uncertain times ahead. But then, you're not a member of the Thall, Hindmarsh, Atkinson and Honderich families whose need to maintain their lavish lifestyles far outweighs the need of TorStar for investment or, for that matter, survival.