Michelle Malkin » The New York Times’ bond rating goes down, down, down

The New York Times’ bond rating goes down, down, down

By Michelle Malkin • July 11, 2007 12:36 PM

Reader D.G. sends a heads up that the S&P is preparing to cut the New York Times bond rating close to junk. He e-mails: “At BBB, they are two levels above junk. One more level ,BBB-, and many bond funds will have to bail from the New York Times as their charter won’t let them hold junk.”

Incoming details from S&P:

S&P Lowers New York Times Ratings To BBB/A-3; Off Watch 2007-07-11 12:18 (New York)

Rationale

On July 11, 2007, Standard & Poor’s Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on The New York Times Co., to ‘BBB’ from ‘BBB+’. The short-term corporate credit and commercial paper ratings on the company were also lowered, to ‘A-3′ from ‘A-2′. All ratings were removed from CreditWatch, where they were placed with negative implications on March 23, 2007, following the company’s announced plan to increase its dividend to shareholders. The rating outlook is negative.

The lower ratings follow our review of the company and, with the industry continuing to exhibit secular and cyclical (in some segments) declines, we have reassessed The Times’ business risk profile. While the company repaid debt with net proceeds from the sale of its Broadcast Media Group and its radio station (WQEW) in the second quarter of fiscal 2007, operating
performance for the month of May was lower than anticipated, with total advertising revenues down 8.5% year over year and newspaper ad revenues down 9.9%. We are increasingly concerned about the pace of decline for print advertising. The Times has embarked on cost-cutting initiatives with some success; however, we expect revenue declines to continue over the next couple
of years and that the company’s credit profile will be more consistent with the new ratings over the intermediate term…

…Outlook

The rating outlook is negative. The Times’ financial profile is expected to remain weak for the ‘BBB’ rating during the intermediate term. In 2007, asset sales will lead to meaningful debt reduction despite capital spending projects, but the related improvement to the company’s credit profile will be reduced by operating declines. In 2008 and beyond, we expect that The Times will have the capacity to repay debt, but we expect that ongoing operating weakness will preclude a significant improvement to credit measures. We believe that secular declines in the newspaper industry will continue to affect top-line growth during the intermediate term. The rating could be lowered if trends related to print advertising remain in line with what was reported in the past few months, suggesting that annual revenue declines may exceed the low single-digit area…

The market speaks.

***
Thomas Lifson calls it a “slow motion business collapse.”

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Posted in: New York Times

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Comments

#1

On July 11th, 2007 at 12:46 pm, On-my-soap-box said:

We need S&P to tell us anything to do with the NYT is junk? When did they get a clue?

I guess there are still some investors out there trying to prop this rag up.
#2

On July 11th, 2007 at 12:50 pm, Bad Candy said:

Pwn3d!
#3

On July 11th, 2007 at 12:54 pm, uhangtight said:

I wonder if someone will come in to prop the rag up? Infuse some capital into the dying giant? Like, maybe, SOROS? LOL….
#4

On July 11th, 2007 at 12:57 pm, gregorystephens said:

I’d imagine that if the New York Times goes bankrupt like other liberal media outlets (Air America), there will be some sort of “Fairness Doctrine” proposed for the print media. These liberals just don’t get that the vast majority of Americans don’t agree with their hate and Bush bashing despite their desperate efforts to paint such a picture in the liberal media. I hope they go under.
#5

On July 11th, 2007 at 1:04 pm, josetheguerilla said:

Hopefully, the NYT will go the way of Air America.
#6

On July 11th, 2007 at 1:06 pm, walterc said:

If they just report the news and leave out the left wing trash, their rating (along with revenue outlook) would go right backup.
#7

On July 11th, 2007 at 1:10 pm, southchild said:

No wonder they are a bunch of Socialists. When the market speaks, they lose.
#8

On July 11th, 2007 at 1:14 pm, On-my-soap-box said:

If they reported the good news of what AMERICA has done and is doing in Iraq, their revenue would sky rocket just on the basis of – they would be the only rag doing so.

GOD Bless the blogs!
#9

On July 11th, 2007 at 1:16 pm, Brian72 said:

Yes walterc, you are correct. That would be like asking NASA to stop worrying about space, or lions on the African savannah to go vegetarian. It’s against the NYT’s DNA to drop the leftist propaganda. If they did that, they would have no reason to get up in the morning. What is the point of a news story that doesn’t make you hate Republicans? To them, there isn’t one.
#10

On July 11th, 2007 at 1:37 pm, ChePibe said:

I used to read the times daily. Had a subscription. Pored over the articles. Sure, there was a bias there – there’s always a bias in a news source – but it wasn’t all that bad, especially when one reads other sources to balance it out.

Then war with Iraq began. Then the New York Times decided it could start divulging any and all classified data. The last copy of the Times I paid for was when they revealed the NSA wiretapping program. I promptly canceled my subscription after that.

Since then, the Times has become more and more haughty, blaming the population for its own faults. Hard copy publication is down worldwide, but the Times has tanked at an incredibly rapid pace due to its OWN screw ups, yet all we – the formerly loyal if not entirely in love readers – are now told that WE are the bad ones, not the Times.

The Times took its stance on the War On Terror. It now serves as an enabling propaganda and intelligence outfit for the enemies of the country that grants it its freedoms. I can take a different point of view on the world, but what the Times has become is utterly despicable. I will never buy another newspaper, read another article, or do anything to support any company associated with the New York Times. Period.

Burn, baby, burn.
#11

On July 11th, 2007 at 1:58 pm, zb42 said:

The market speaks.

This explains why the NYT front-paged this whiny (and false) article about how “free-market orthodoxy” should be challenged in Economics Departments.

First of all, Keynesian Theory and its derivatives were the Orthodoxy when I took Economics in college long ago. From what I hear, that hasn’t changed much.

Second, I was NEVER exposed to Free-market thinkers such as Hayek, Von Mises, and Friedman. It was AFTER college and I started reading on my own that I discovered the Free-market thinkers.

I think, if the NYT had its druthers, it would become a partially government subsidized media entity, ala PBS. Hence the free-market bashing.

If you can’t make it in the free-market, whine about it. Claim to be victim of it, then get insulated by the government from it.

The Times’ demise can’t happen fast enough for me.

p.s. so the IPhone’s coattails weren’t big enough to carry the NYT? Hard to believe given how times we’ve had to see the IPhone’s browser boot-up with the NYT…
#12

On July 11th, 2007 at 2:07 pm, RobM1981 said:

OK, so clearly the Slimes can’t/won’t accept that the Market has spoken. Anyone care to venture a guess around who the Times will blame this on tomorrow? Candidates for blame:

George W. Bush
Dick Cheney
Ann Coulter
Ronald Reagan
Richard Nixon
Christians
The Supreme Court
Fox News
Our own Michelle Malkin
Iraq
or
Scooter Libby
#13

On July 11th, 2007 at 2:30 pm, Brian72 said:

Rob, you forgot a few:

Rush Limbaugh
Tom DeLay
Paul Wolfowitz
Micheal Steele
Karl Rove
The Washington Times
Brent Bozell III
Lt. Col. Oliver North
Newt Gingrich
Joe Lieberman
Don Rumsfeld
and now……Fred Thompson
#14

On July 11th, 2007 at 2:45 pm, brentano said:

Know what this is?

It’s a GRIM MILESTONE.
#15

On July 11th, 2007 at 3:17 pm, rjbjrirish said:

RobM1981, you have overlooked the obvious: It’s Karl Rove’s fault!
#16

On July 11th, 2007 at 3:38 pm, tyrion said:

Please, New York Times, have the good manners to die.
#17

On July 11th, 2007 at 4:09 pm, Pat said:

Now that the people of America have dismissed the NYT as worthy of their time, I hope the White House does the same.
#18

On July 11th, 2007 at 4:15 pm, arkansasmike said:

Karl Rove is in a slump. I think it’s Rush’s fault. He’s running America, you know.
#19

On July 11th, 2007 at 4:51 pm, Brian72 said:

I know it and you know it.
#20

On July 11th, 2007 at 5:27 pm, jferg49 said:

Gosh, finally, their bond rating now matches their literary rating…JUNK…
#21

On July 11th, 2007 at 5:51 pm, Yashmak said:

Know what this is?

It’s a GRIM MILESTONE.

Heh, excellent.
#22

On July 11th, 2007 at 6:24 pm, JConrad999 said:

Great news. Now, we just need a few other left wing rags to follow suit.
#23

On July 11th, 2007 at 8:04 pm, deepdiver said:

I would much rather see the management suddenly “get it” and understand why their circulation is dumping than see it go under. It is a shame to see the liberals destroy yet another American icon.
#24

On July 11th, 2007 at 11:36 pm, Polar said:

My local rag gets many a feed from the LA Times or WaPo. Then they make sure that we readers are subjected to a large daily dose of anti-war, anti-Bush, anti-you name it. The kind of nonsense that the big guns have been peddling has far greater reach than just off their money-losing pages, it trickles down to I would guess most of the smaller-city papers in the country too. Funny how they never seem interested in pulling an article from the Washington Times.
#25

On July 12th, 2007 at 7:41 am, PokerGuy said:

We could also use a more centrist replacement for the AP. It too finds its way uncritically into many local publications.

So bond ratings have dropped, stock prices are down and the rag is selling off assets. If this were a “normal” corporation, the Board would already have replaced top management, brought in a fixer or two, and begun close scrutiny of changes intended to correct the slide. Because of inside stock control at the Times, though, management problems will remain in place and the company will continue on its suicidal path. The market will have no choice but to walk away, which it is in the process of doing.
#26

On July 12th, 2007 at 1:59 pm, feebiebabe said:

“Two levels above junk.”

What, the SF Chronicle?