Standard & Poor's Ratings Services lowered its corporate credit rating on the Times Co., while Moody's Investors Service said it might lower its rating on certain Times Co. debt.
"The ratings downgrade reflects our expectation that a likely U.S. economic recession over the intermediate term would continue to meaningfully exacerbate rates of ad revenue decline over at least the next year," an S&P analyst said.
Ad revenue declines at the Times Co. are already alarming. Ad revenue fell 14.4% in the third quarter, the company said Thursday. It is now considering cutting its dividend and writing down the value of its New England Media Group, which includes the Boston Globe, by $100 million to $150 million.
"In the midst of the softening economy, advertising has certainly weakened," said Janet Robinson, president-CEO, during a conference call to discuss its results. "We saw this across all of our properties this quarter."
The company, however, showed investors a brave face where it could. According to the Times Co., online ad revenue increased 10.2% in the third quarter. Costs declined 6.6% despite a 22.1% surge in newsprint prices. Circulation revenue increased 1% on higher home delivery and newsstand prices. And news events around the world showcased the importance of its core product, the company said.
"These are difficult times in the economy and in the media industry," Ms. Robinson said. "We believe, however, that we have many strengths that are helping us successfully weather this period. We have strong and trusted brands that we are leveraging into new products in print and online. Our digital businesses continue to grow. And we are increasing the share of our revenues and profits that come from our online businesses. We have a proven track record on expense reduction, and we are executive well on our expansive program to lower our cash cost base. We continue to seek opportunities to rebalance our portfolio of products."
Shares in the Times Co. closed at $10.70, up 0.19%.