TW’s nickel-and-dime dilemma

Conglom draws invetsors ire

Showbiz congloms were once sexy, high-octane beasts with robust stocks and the implicit promise of heady growth. But not lately.

Proof?

They’ve started paying dividends.

But instead of applause, the meager nickel payout Time Warner recently unveiled drew barbs from small shareholders. And it freaked out a cadre of Wall Street investors raised in a go-go market who see dividends as defeat — the equivalent of saying there aren’t many cool new areas to funnel company cash, and that a stock’s past its prime.

“I’m disappointed you’re even paying a dividend. To me, it’s almost an admission you’re running out of places to invest,” one Wall Streeter snarled at TW’s chief financial officer Wayne Pace at a conference last week. “If you’re going to return capital to me, because I can do better with it than you, then why would I want to invest in you?”

“It’s a personal and a philosophical” issue, responded Pace. “Most large-cap, quality companies pay a dividend.”

“We will have plenty of places to invest but we believe a dividend is a way to recognize that there is going to be a permanent return — as well as the progression of the stock.”

Viacom gets to have it both ways.

When it splits, the “value company” housing slower-growth broadcast assets will pay dividends; the “growth company,” with cable and film, likely won’t.

Viacom started paying a 6¢ dividend in 2003 and boosted it to 7¢ last year, for a $2.9 billion payout.

A nickel a share will drain $1 billion from TW coffers.

Investors may gripe, says Hal Vogel of Vogel Capital Management, “but no one ever throws a check away.”

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