Osprey pays, but it's getting harder

Osprey Media Income Fund continues to pay unitholders about 9 cents a unit according to its year-end financials just released. However, the newspaper and magazine chain, headed by Michael Sifton, appears to be struggling to keep up the payments.

According to the data released as of December 31, 2005, the company had net income for the year of $23.6 million and was carrying forward a deficit from the year before of $14.4 million. Distributions to unitholders totalled $44 milion, leaving the company with a deficit at the end of the year of $34.8 million. In other words, the company's properties are not churning out as much cash as the the company feels obliged to distribute to its unitholders.

This is one of the significant downside risks of unit trusts, which retail investors buy in order to achieve a steady stream of income. But in a business like this, that is subject to ups and downs of the marketplace, particularly advertising, it is sometimes hard to keep that payout tap open.

Osprey owns a chain of community newspaper and magazines, mostly in southern Ontario including 21 daily newspapers (paid circulation), 38 non-daily newspapers (both paid and unpaid circulation), 7 shopping news (unpaid circulation) and48 magazine and specialty print publications (both paid and unpaid circulation), as well as 20 small and mid-sized telephone directories. A post last year detailed the purchase of the Town Group, including Hamilton magazine. The only national magazine it owns is Vines. Most of its other magazine titles are small, one-city or regional in nature. The majority of the company's income comes from its newspapers.