Fisher Communications suspends dividend

Stock in Fisher Communications (O:FSCI) dropped 25 cents to $54.95 on Friday (7/5) after the company announced on the eve of the Fourth of July that it was suspending payment of its quarterly dividend. The dividend, which had been $0.26 per share quarterly - - or $1.04 per year - - was last paid 3/1 to Q1 shareholders.

Seattle-based Fisher said the board of directors of the radio and TV group owner will consider whether or not to pay future dividends, based on the company's financial results. Not paying a dividend for Q2 will save the company $2,235,000.

"Beginning last year, Fisher reduced operating expenses significantly. However, a lagging northwest economy compounded by poor ABC network performance continues to adversely affect advertising revenue, particularly in our Key Seattle market," said President and CEO William Krippaehne Jr. in announcing the dividend suspension. "In light of these current conditions and our ongoing capital commitment for Fisher Plaza, we believe it's both prudent and in the best interests of the company to take this step." (Fisher Plaza is the company's Seattle real estate development, including studios for its flagship TV and radio stations.)

Only two of Fisher's 12 TV stations are ABC affiliates, but they happen to be the company's two biggest stations - - KOMO-TV (Ch. 4) Seattle and KATU-TV (Ch. 2) Portland, OR. Those stations are in Nielsen markets 12 and 23, respectively, while Fisher's other TV markets range from 114 to 166.

RBR Observation:

Many broadcasting companies don't pay a dividend on their stock - - and never have, figuring that investors are more interested in having them reinvest profits to boost their stock price. But once you've been paying a dividend, it's always a shock to shareholders if you stop doing so. That's particularly true in this case since more than 16% of Fisher's stock is held by various Fisher family members and trusts, who've been accustomed to receiving about $1.4M in dividend payments each year. None of those family members get a paycheck from the company, expect for four who receive about $20K per year for serving as directors and Donald Graham, who is paid about $60K as Chairman of the Board of Directors.

Another big Fisher shareholder is Microsoft (O:MSFT) founder Bill Gates, who owns 5.3% of the company (RBR.com 4/12). We doubt that he'll have to cut back on expenses because he won't be receiving about $474K in annual dividends from Fisher.