Moody's Investors Services downgraded The New York Times Co. to Baa3, the lowest investment-grade level, from Baa1 on Monday, saying it believes the publisher's free cash flow leverage will remain "significantly weaker" this year than expected, Editor & Publisher reported.

According to Moody's, The Times' debt position will be weaker because of an "ongoing deterioration in newspaper advertising revenue" combined with the cash it will need to fund capital spending initiatives, as well as US$132 million in annual dividend payouts.

Moody's assigned a "stable outlook" to the publishing company, saying it expects “greater revenue stability in 2009 as digital media generates more revenue and cyclical economic pressure eases”, E&P reported.

Moody's said The Times Co. is managing its balance sheet in a conservative manner.

Moody's believes the Times' revenue will decline and credit metrics will weaken in 2008. However, according to the note from Senior Analyst John E. Puchalla, its debt-to-EBITDA will improve to the low 3-times range from approximately 3.4-times now.