By: E&P Staff Moody's Investors Service kept its ratings of The New York Times Co.'s senior unsecured and Prime-2 commercial paper at investment grade Monday -- but changed its rating outlook to "negative" from "stable."
"The negative rating outlook results from increased pressure on the company's retail and classified advertising from cross media competition and the downturn in the housing market," Moody's said. "These pressures along with the 31% increase in the company's quarterly dividend in March 2007, tax payments on recent asset sales and continued heavy capital spending through early 2008 will challenge the company's ability to generate sufficient free cash flow to reduce debt-to-EBITDA in 2008 to the 2.5x level previously anticipated."
Moody's rated Times Co. debt at Baa1, which is two notches above junk territory.
"The Baa1 rating is supported by (The New York Times') unmatched global news and information infrastructure that supports high quality content, strong brands, and the company's position as a leader in prioritizing the national daily news agenda," Moody's said. "The content appeals to a large and affluent customer base that is attractive to advertisers and generates a subscription revenue stream that exceeds most newspaper industry peers."
Times Co. shares (NYSE:NYT) closed Monday down 35 cents, or 1.35%, to $22.10 on a day when nearly every publicly traded newspaper stock had similar declines.
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