Ratings Agencies Slash New York Times Status to 'Junk'

27 October 2008

NEW YORK: Despite recent criticism directed at the credit ratings industry – and concerns as to its impartiality – the impact of Standard & Poor's triple downgrading of the New York Times Company is bad news for one of America's most respected newspaper publishers [but welcome tidings to Rupert Murdoch]. 

Some see the publisher's downgrading to 'junk' status as revenge by a discredited industry on the NYT Magazine, which earlier this years rated the raters as a 'Triple-A Failure'.

But there's no escaping the fact that the NYTC's revelation last week of fresh impairment charges, a quarterly underlying loss and a review of its dividend policy, did nothing to enhance its share price or bond/credit rating.

The concomitant cut in S&P's rating from triple B to double B was followed by a warning from rival rating agency Moody's that it too might lower its rating to 'junk', a move that would inflate NYTC's cost of borrowing.

The publisher's ceo, Janet Robinson, blamed the downgrading on the decline in print advertising revenues across the US newspaper industry, worsened in the third quarter in tandem with the economic decline. Visibility about future advertising bookings, admitted Robinson, was "limited".

And for connoisseurs of the richly ironic … one of the most buoyant advertising sectors for the NYTC over the past few months has been the financial services industry, with mutual funds, banks and insurance companies frantic to reassure their customers.

Data sourced from Financial Times; additional content by WARC staff