Standard & Poor’s placed The New York Times Co.’s BBB- rating (the lowest investment grade rating) on CreditWatch negative on Wednesday, following the release of the publisher’s second-quarter earnings. In addition, a report out Wednesday from Goldman Sachs predicted that the company would be downgraded to noninvestment grade (junk status) within the next six to 12 months. During an earnings call, Times executivessaid the company intends to keep its investment-grade status, noting that it has historically been the case.
The economic downturn and changing media landscape are hitting the Times hard. The publisher’s net income sank 82 percent during the second quarter, compared with the same period a year ago, to $21.1 million. Total revenues decreased 6 percent to $741.9 million. Executives weren’t able to predict how advertising will fare for the remainder of the year, and Janet Robinson, president and chief executive officer, added that ad budgets remain tight. She noted that categories directly impacted by the price of oil, such as airline, hotel and automotive, will continue to be a struggle.
Last month alone, ad revenue for the New York Times Media Group decreased 18.3 percent due to dips in studio entertainment, technology, telecommunications and media advertising. Retail ad revenue fell because of softness in the department store, mass market, national retail and cosmetic manufacturer categories. Luxury print advertising was a bright spot, though, up in the low-single digits from last year in part due to the “T” supplements, which are becoming increasingly important to the ailing Times. A spokeswoman said fashion jewelry was strong with increases from fashion and watch advertisers. Online revenues are on the rise, up 13 percent, thanks to strong display advertising.
This story first appeared in the July 24, 2008 issue of WWD. Subscribe Today.
To make up for the tough times, the paper is again boosting its cover price. Starting Aug. 18, the Times will increase its Monday-Saturday newsstand price by 25 cents to $1.50. This announcement comes only a week or so after The Wall Street Journal said it was raising its newsstand price by 50 cents to $2, starting July 28. During the call, Robinson noted that the two newspapers share only an 11 percent overlap in circulation.