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Bonds News

CORRECTED - Moody's cuts New York Times rating to junk

(Corrects rating in second paragraph to “Ba3.”)

NEW YORK, Jan 23 (Reuters) - Moody's Investors Service on Friday cut its ratings on The New York Times Co NYT.N into junk territory, saying declining advertising revenues will continue to pressure the newspaper publisher's earnings.

Moody’s cut The New York Times three notches to “Ba3,” three steps below investment grade, from “Baa3.” The outlook is negative, indicating an additional downgrade may be likely over the next 12-to-18 months.

Standard & Poor’s cut The New York Times into junk territory in October. For details, see [ID:nN23535859]

“Earnings pressure and higher cash interest costs will limit free cash-flow generation in each of the next two years notwithstanding a significant reduction in capital spending, and the recent 74 percent cut in the dividend,” Moody’s said in a statement.

Moody’s expects The New York Times’ revenue and earnings before interest, taxes, depreciation and amortization (after buyouts and excluding City and Suburban operations from 2008) will decline by approximately 10 percent and 30-to-35 percent percent, respectively, in 2009 with only modest improvement in 2010.

The New York Times said last week it will get a $250 million investment from one of the world’s richest men, Mexican billionaire Carlos Slim, a move that will give the company much-needed time to clear financial hurdles. [ID:nN19378857]

The investment “improved the company’s liquidity,” Moody’s said. However, “the earnings decline along with a significant increase in the underfunded pension liability will weaken credit metrics considerably.” (Reporting by Karen Brettell; Editing by Tom Hals)

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