NEW YORK, Oct 23 (Reuters) - Standard & Poor's on Thursday slashed its ratings on the New York Times Co into junk territory and cited concerns about the newspaper publisher's revenue outlook, after it posted a third-quarter loss.
S&P said a likely U.S. recession will exacerbate declining advertising revenues and prolong the time until the declines will be made more manageable, possibly until 2010.
Until advertising declines are moderated the publisher will not be able to execute revenue strategies and cost cutting measures that are key to stabilizing its earnings, the rating agency added.
"It is our estimate that the company's total revenue will decline in the mid-teens percentage area in 2008 year over year, and that earnings before interest, taxes, depreciation and amortization (after buyout expenditures) will decline by more than 30 percent in 2008 and by about an additional 30 percent well into 2009," S&P said.
It cut the Times' rating three notches to "BB-minus," three levels below investment grade, from "BBB-minus." The outlook is negative, indicating an additional cut may be likely over the next one-to-two years.