NYT Co. May Be Downgraded To Junk
Oh, this is really not what you want to hear if you are a fan of the newspapers, or journalism as a whole, or especially if you're an investor in the NYT Co.: In the wake of shitty third-quarter earnings, the ratings service Moody's is warning that it may downgrade the company's debt to junk status. It's currently at Baa3, the lowest rating before junk. A downgrade would make it even harder for the company to borrow money, which—without going into a lot of financial mumbo-jumbo—is not what they need right now (Pictured: their year-to-date stock price). Financial mumbo-jumbo quote from Moody's analysts below:
"(New York) Times' third quarter 2008 operating performance was within the lower end of the range Moody's had anticipated, but weaker expectations for the balance of 2008 and in 2009 and the refinancing risk associated with upcoming debt and committed revolver maturities have prompted Moody's to review the company's ratings," analysts John E. Puchalla and Alexandra S. Parker wrote... "Moody's will consider (New York) Times' ability to return free cash flow generation to meaningfully positive levels during 2009 through the culmination of several significant capital projects, a possible reduction in the dividend, and revenue and cost initiatives," the analysts wrote.