NY Times posts loss from continuing ops; eyes debt cut
NEW YORK (Reuters) - The New York Times Co posted a quarterly loss from continuing operations on Thursday because of charges for job cuts, and is looking for ways to reduce debt as the changing habits of its readers and deepening financial crisis suck away advertising dollars.
The preliminary results exceeded Wall Street's expectations, but point to a steady decline in the fortunes of U.S. newspapers, including the New York Times, which is so widely read in the United States that many call it the paper of record.
The company's stock fell more than 10 percent on Thursday, hitting its lowest level since 1991, before rebounding to close up two cents to $10.70.
The newspaper said it expects to write down the value of its New England assets, including The Boston Globe, by up to $150 million, illustrating the dismal state of print advertising.
On Thursday, Standard & Poor's Ratings Services cut its rating on the Times to junk after Moody's Investors Service said it might do the same because of revenue declines and risks associated with paying its debt.
That could make it more expensive for the company to borrow money in the future.
"We plan to continue to explore opportunities to reduce our debt levels," Chief Executive Janet Robinson said in a statement earlier in the day.
Benchmark Co analyst Edward Atorino interpreted her remarks as a sign the newspaper would consider selling properties.
"The word 'opportunities' you could put in quote marks," he said. "I'm not sure they can sell The Boston Globe anymore."
Media experts repeatedly have said the New York Times could sell the Globe, but Robinson told analysts on a conference call it is a difficult time for publishers to sell. Many newspapers now are worth far less than they were just a few years ago.
A dissident shareholder group that got two members elected to the New York Times board this year also suggested selling assets.
Some analysts have been waiting to see what the Times would say about its debt after publishers such as McClatchy Co and Gannett Co Inc were put on watch or downgraded by credit rating agencies.
The New York Times said it still expects to manage its debt obligations. At the end of the quarter, the company had $46 million in cash and about $1.1 billion in debt.
The Times wants to cut more expenses, and its board plans to review its dividend policy this year. Other publishers have slashed dividends to devote more money to paying debt.
Companies whose debt exceeds their cash beyond levels agreed on with their lenders risk default. More companies are worrying about this as the financial crisis deepens, forcing them to tap into lines of credit that they often keep on reserve.
The Times said it has "little visibility" on how ad revenue will be in the fourth quarter, but said the October declines were similar to those in September.
September revenue fell 8 percent, and news media group ad revenue dropped 14 percent. Digital ad revenue also is slowing because of a decline in display advertising.
U.S. newspapers are trying to reverse this trend, especially by relying on the Internet, but online ad revenue is not growing quickly enough to offset print declines. At the New York Times, it represents more than 12 percent of total revenue.
The New York Times is cutting back its expenses, and plans to trim even more. Some of the cost reductions have come through job cuts, including at its flagship newspaper.
The Times posted a preliminary third-quarter loss from continuing operations of a penny a share, compared with a profit of 10 cents a share in the same quarter a year ago.
Excluding charges, its preliminary profit was 6 cents a share, beating analysts' average expectation of 4 cents a share, according to Reuters Estimates. Net income, including discontinued operations, was $6.5 million, or 5 cents a share
Revenue fell 8.9 percent to $687 million.
The write-down, expected to be between $100 million and $150 million, comes after an $814 million write-down on its New England properties in 2006. The company said it would record the charge in its third quarter financial statements.
Severance charges in the most recent quarter were $10.3 million after taxes, or 7 cents a share.
(Additional reporting by Karen Brettell. Editing by Derek Caney, Maureen Bavdek, Toni Reinhold and Carol Bishopric)