S&P downgrades outlook on New York Times credit

AP News
Posted: Jul 27, 2012 5:47 PM

NEW YORK (AP) — Standard & Poor's ratings services lowered its outlook on the credit ratings of The New York Times Co., citing a decline in print advertising revenue.

S&P cut its outlook to "stable" from "positive" on Friday. That means there isn't likely to be an upgrade or a downgrade of the company's credit rating in the next 12 months. The company's corporate credit rating is currently at "B+."

The company, which publishes such newspapers as The New York Times, The Boston Globe and the International Herald Tribune, has suffered drops in advertising revenue along with the rest of the newspaper industry primarily because of competition from the Internet. S&P said it expects the declines to continue for the foreseeable future.

According to S&P, growth in the company's high-margin digital advertising revenue has halted. The ratings agency said that digital revenue has been a key factor in offsetting the company's decline in its print advertising revenue. In the second quarter, digital advertising revenue from the company's newspaper businesses fell nearly 2 percent to $53 million.

The New York Times Co. declined comment. The company has been trying to reduce reliance on advertising by charging for full access to its websites. The company reported Thursday that second-quarter revenue increased slightly, with most of the gains coming from higher newspaper circulation, especially in its digital editions.

S&P said it could lower the rating to "B'' if newspaper ad revenue starts declining more quickly.

Alternatively, S&P said it would consider an upgrade to "BB-" if the company "can develop traction" in digital revenue to offset the decline in print.