Yesterday AH Belo announced results. Besides releasing the numbers, the recently spun-off newspaper company also amended its revolving credit facility and instituted a 6 cent dividend. The amendment permits the dividends as long as there is no outstanding balance on the facility. If BLC doesn't want to put a new bank facility in place now with looser covenants, why not explore a similar amendment? If AHC's crappy newspaper operations support this type of amendment, can't the BLC board/management get a similar amendment to allow stock repurchases as long as nothing drawn on facility?
From BLC 10-Q...
"The Company has a stock repurchase program pursuant to authorization from Belo’s Board of Directors in December 2005. There is no expiration date for this repurchase program. The remaining authorization for the repurchase of shares as of March 31, 2011, under this authority was 13,030,716 shares. During the first quarter 2011, no shares were repurchased under this program. The Amended 2009 Credit Agreement, which became effective November 15, 2009, does not permit share repurchases."
I know people will point to management/board being conservative and likely to hold cash to make sure the bond maturity is taken care of in May 2013, however, it seems prudent to me to have such an amendment in place so the company can be opportunistic and take advantage of any sell-off (like the one we are experiencing) and the greater return on capital opportunities afforded by the open market purchases of common stock. BLC can always take care of the bond maturity with a new facility whenever it wants in the future.
It's the reason the stock has done poorly. They are not putting their cash to good work. If they are really THAT concerned about their 2013 maturity all they have to do is a new $200 Million revlover (with nothing drawn). If they do that than they can pay out a dividend of a $1.20 a year, rather than $0.20. Stock would more than double on that announcement.
CBS reports strong numbers after bell... points to strong quarterly growth, highlights robust FCF, doubles dividend, repurchases $250mm in stock, and extends credit facility through 2015 at better rates. Hmmmm.... interesting playbook. Bet Les won't disappoint on the 4:30 call. Should be good for sector as a whole.