For a minute there, we were worried that we had knocked New York Times stock down 10% (with our “Running On Fumes” post). But it seems the Grim Reapers at Moodys did the dirty work, finally waking up to the fact that the company’s cash situation is dire.
(Where have they been, by the way? And why does the debt deserve “junk” status? And what is this with this absurd rating-agency convention of announcing that you might cut the rating. Just cut it already.)
Newspaper advertising market conditions are likely to remain challenging in 2009 and continuing revenue declines will make it difficult for the company to bring its credit metrics in line with its investment grade rating, Moody’s said in a statement.
It will also make it hard for the publisher to execute its plans to improve liquidity, Moody’s added.
Moody’s said it may cut the New York Times from “Baa3,” the lowest investment grade. Downgrades into junk territory can significantly increase a company’s borrowing costs.
Risks from refinancing maturing debt also prompted the review for downgrade, Moody’s said.
The New York Times said it is looking for ways to reduce its debt, but said it is a difficult time to make asset sales.
See Also: New York Times Running On Fumes
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