Open letter calls for GateHouse Media CEO to drop dividend plan

In an open letter to GateHouse Media CEO Michael Reed, Douglas McIntyre, the editor of 24/7 Wall Street strongly suggested it is a poor time for the embattled newspaper company to be issuing dividends:

With the company's stock at a 52-week low, and down 86% from the period high, Wall St. does not believe that Gatehouse has the cash to pay its tremendous yield and make it debt service.

Most other public newspaper companies announced drops in advertising revenue of between 10% and 15% in May. Based on the last quarter, Gatehouse had razor thin operating margins, and debt service of over $24 million.

With long-term debt at $1.2 billion, Gatehouse may not make it even with the dividend gone. It certainly has almost no chance if the payments continue.

McIntyre is the former editor of Financial World magazine. GateHouse Media owns The Carthage Press, Neosho Daily News, Big Nickel, and Pittsburg Morning Sun.