NEW YORK (Standard & Poor's) July 23, 2008--Standard & Poor's Ratings Services
today placed its ratings for The New York Times Co., including the 'BBB-'
corporate credit rating, on CreditWatch with negative implications.
"The CreditWatch listing reflects an accelerating pace of total revenue
decline and a rate of decline in EBITDA in the first half of 2008 that
indicates the company may have difficulty achieving our expectations for the
current rating," explained Standard & Poor's credit analyst Emile Courtney.
"This is notwithstanding our understanding that The New York Times is
attempting to lower its cost base by more than $130 million in 2008."
Total revenue declined 5% in the March 2008 quarter, 6% in the June 2008
quarter, and 10% in the month of June 2008. In the six months ended June 2008,
EBITDA declined by 20% excluding buyout expenditures and by 36% after buyout
expenditures. The current 'BBB-' rating incorporates the expectation that
total revenue declines would not exceed the mid-single-digit area this year,
and that EBITDA declines would not exceed the mid-teens percentage area
(excluding buyout expenditures). Maintenance of the current rating also
depends on the company growing its online revenue base in a manner that can
begin to fully offset print revenue declines over the next two years and,
concurrently, EBITDA generation stabilizing over this time frame. The
likelihood of the company achieving these goals is complicated by the current
pace of print advertising revenue declines, even though online revenue growth
at 13% remained good in the June 2008 quarter. In addition, we are concerned
the company will be unable to maintain leverage (as measured by total lease-
and pension-adjusted debt to EBITDA) at 3.25x or less on average--the target
for the current rating. Leverage was 3.5x at June 2008.
In resolving the CreditWatch listing, we will review operating and
financial expectations over the near-to-intermediate term.
Complete ratings information is available to subscribers of
RatingsDirect, the real-time Web-based source for Standard & Poor's credit
ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings
affected by this rating action can be found on Standard & Poor's public Web
site at www.standardandpoors.com; select your preferred country or region,
then Ratings in the left navigation bar, followed by Credit Ratings Search.
