NY Times Bond Rating Downgraded

Completely overlooked last week was this item at Market Watch noting that Moody's Investor Services downgraded the New York Times bond rating.

Moody's Investors Service on Tuesday revised New York Times Co.'s rating outlook to negative from stable and affirmed its Baa3 senior unsecured and Prime-3 commercial paper ratings. The revision reflects Moody's concern that a continued deterioration in the company's advertising revenue could make it increasingly difficult for the company to bring metrics in line with the rating in 2009. "Moody's expects NY Times will continue to proactively manage its revenue initiatives, pricing strategies, and cost structure in an effort to mitigate the effects of the advertising downturn and to manage its balance sheet conservatively, and these are key factors in Moody's affirmation of the existing ratings," said the ratings agency."

The impact of this downgrade is to increase the interest cost of any future fixed rate issues that the New York Times might make, plus increase the cost of any current variable rate debt that the company has. Upshot is the capital markets are slowly becoming more and more expensive for the Times to access, which hurts the bottom line.

This also is an indictment of the senior management at the Times. Any rating is an evaluation of senior managment capability as well as the financial numbers of the entity. Since the financial downturn at the Times is not exactly a sudden surprise, this downgrade to "negative" is a sign that Moody's has concluded that the Times senior management is not capable of turning this around any time soon.

You are watching a former giant in the publishing field fall apart before your eyes.