CHICAGO (MarketWatch) — New York Times Co. said Tuesday morning that it expects next year to be “among the most challenging” it has ever faced as advertising revenues fall further.
In a statement before a scheduled presentation at an investment conference, the media company
said ad revenues continued to decline in November from the previous month.
Chief Executive Janet Robinson said the company expects the declines in classified help-wanted, real estate and automotive advertising that have severely damaged the newspaper industry to continue in 2009. Speaking at a UBS conference that was Webcast, Robinson said it was difficult to tell how much of that downturn is cyclical and how much is secular.
As a result, the company said it is evaluating its “liquidity requirements” and is in discussions with lenders regarding debt set to mature in the next two years.
“We have no intention or need of fully replacing the $400 million credit facility expiring next year because our total borrowing under both agreements is projected to be significantly less than $800 million, and currently is approximately $400 million,” James Follo, senior vice president and chief financial officer, said in the statement. See MarketWatch First Take.
An already difficult credit environment could become even more stringent now that Tribune Co., publisher of the Chicago Tribune, the Los Angeles Times and other newspapers, as well as the owner of a number of TV stations, filed for Chapter 11 bankruptcy protection on Monday. See full story.
Follo also said the company will continue to evaluate its assets, but added that the “the feasibility of asset sales at this time is uncertain given the current market and credit environment.”
On Monday, the company’s flagship newspaper reported that the New York Times Co. plans to borrow as much as $225 million against its Manhattan headquarters building.
The company in November cut its quarterly dividend by 74% in an attempt to decrease its debt. Over the last few months, it has cut jobs and reduced other costs.
Last month, New York Times said October ad revenue at its newspapers fell 17.2% on continued weakness in print advertising. Classified sales dropped nearly 35%.
In the third quarter, New York Times Co.’s total advertising revenue dropped 14%. Classified-ad sales plunged 29%.
Follo said Tuesday the softness in online advertising that the company noted in November has extended into December, and he said it appears that 2009 is “going to be a very different year” from 2008, which was solid for the first three quarters of the year.
While there has been “continued growth” in cost-per-click and search advertising, trends in display advertising have “not been good,” Follo explained.
Follo said the company opted to keep issuing a quarterly dividend because it remains a profitable concern, and in cutting the payout by 74%, the board believed it had found “the right balance between maintaining financial flexibility and returning cash to shareholders.”
Despite the situation, Robinson said Tuesday that the founding Ochs-Sulzberger family, which maintains supervoting control of New York Times Co., has no intention of selling the company. Commenting at a UBS conference, Robinson said the family continues to “believe in the editorial independence of the product that is produced every day.”
The weakened U.S. economy, stifled by the subprime mortgage crisis, has dealt a punishing blow to classified advertising revenues, which for decades had been the main source of income for newspapers. The proliferation of Web sites that offer free classifieds, such as Craigslist, had already diminished the demand for newspaper classifieds before the category plummeted in 2008.
Shares of New York Times fell 6.4% to close at $7.35 on Tuesday. It has fallen more than 65% for the year.
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