Times faces shareholder, credit agency pressure

By Michele Gershberg and Kenneth Li

NEW YORK (Reuters) - The New York Times Co (NYT.N: Quote, Profile, Research, Stock Buzz) faced renewed pressure over its business strategy on Friday as it posted a steep drop in advertising sales and weaker online growth, coinciding with the start of a proxy battle by a dissident investor group over board seats.

The January results prompted Standard & Poor's to take a negative view of the Times's long term "BBB" debt rating, warning that a "downgrade may not be limited to one notch."

The publisher of the New York Times and International Herald Tribune said its advertising revenue fell 9.8 percent in January. Internet ad revenue rose 8.6 percent, but was slower than monthly growth rates near 20 percent since August.

The data was released shortly after Harbinger Capital Partners and Firebrand Partners filed their proxy to nominate four directors to the Times's board, in a public call to shareholders to accelerate its move into digital media and dispose of non-core assets.

S&P said it would talk to management about their long-term strategy "at a time when there is currently pressure to pursue a more aggressive acquisition policy of online assets."

The Harbinger-Firebrand group has built up a 19.03 percent stake of the Times's Class A shares, which makes it the largest holder of the newspaper publisher's publicly traded shares.

The Ochs-Sulzberger family owns an equity stake of about 19 percent in the publisher of The New York Times and International Herald Tribune, but controls its fortunes by holding 88 percent of privately held Class B voting shares.

"If they play the politics right, they might get a couple of guys on the board," Benchmark Co analyst Ed Atorino said of the dissident group. "But it's a long shot at best."