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>Because some of you still(?) read the NY Times….

By Sarah Rabil

Aug. 12 (Bloomberg) — New York Times Co. faces increased financial pressure to cut its dividend as credit quality deteriorates amid record advertising declines.

Bondholders are paying for the Sulzberger family’s decision last year to raise the quarterly dividend 31 percent to 23 cents a share. The extra yield investors demand to own New York Times bonds instead of U.S. Treasuries has more than doubled in 2008. The cost to protect the debt against default has climbed 27 basis points since the newspaper publisher posted earnings July 23, meaning investors are betting that credit quality will weaken further.

Moody’s Investors Service says one way for New York Times to save its rating, a step above junk and in danger of being cut, would be to reduce the dividend costing $132 million a year.

“They’d have potentially more cash available to fund investments and debt reduction,” Moody’s analyst John Puchalla in New York said in an interview. “Depending on how they use that cash that’s freed up, that could be beneficial to the rating.”

Shareholders also are losing out with a 39 percent drop in the stock since March 2007, when the New York-based company’s controlling Ochs-Sulzberger family raised the dividend the most in a decade to appease investors. The payout, coupled with an accelerated 16 percent drop in June ad sales, has contributed to higher borrowing costs while failing to support the stock. The Class A shares rose 6 cents to $14.15 at 6.33 a.m. in New York Stock Exchange composite trading.

Like Junk

Credit-default swaps used to speculate on New York Times’ creditworthiness or to hedge against losses are trading as if the company already was rated junk, according to data from Moody’s credit strategy group.

The contracts, costing $397,000 a year to protect $10 million in debt for five years, trade as if the company had a Ba3 rating from Moody’s, three levels below its actual Baa3 rating, the data show. Moody’s on July 29 changed its credit- rating outlook to negative on concern the advertising slump will worsen.

Standard & Poor’s BBB- rating, on watch for a downgrade, already reflects the dividend’s cost, analyst Emile Courtney said in an interview. Faster print-ad declines in the industry’s worst slump on record could trigger a junk rating, the New York- based analyst said.

A rating cut to junk may increase the spread, or extra yield, on 5 percent New York Times bonds maturing in 2015 by at least 73 basis points to 551 basis points, according to the Merrill Lynch BB Bond Index. That indicates the bond’s price may fall 3.1 cents on the dollar to 80.3 cents.

Those bonds have fallen to 83.4 cents on the dollar from 94.2 cents in late 2007, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The spread more than doubled to 478 basis points. The bondholders are primarily insurance companies, including State Farm Life Insurance Co. Bank lenders include Bank of America Corp. and JPMorgan Chase & Co.

Rivals Retreat

Competitors are abandoning the strategy of using the dividend to retain investors, said Ken Doctor, an analyst at Outsell Inc. in Burlingame, California.

In the past month, Miami Herald publisher McClatchy Co. put its dividend policy on review; GateHouse Media Inc., publisher of 97 dailies, suspended its payout; E.W. Scripps Co. declared a smaller dividend than it forecast before splitting off cable-TV channels; and Gannett Co., owner of USA Today, skipped its annual increase for the second time in 41 years.

Each saw a drop in newspaper advertising in the second quarter, following the industry’s 14 percent skid in the first.

New York Times’ dividend yields 6.5 percent, second-highest after Gannett among media companies in the S&P 500 Index, according to data compiled by Bloomberg. The family’s 19 percent equity stake, according to filings, entitles members to about $25.1 million in payments this year. A family trust holds 89 percent of Class B shares that elect 70 percent of board members.

Newsroom Cuts

The family has historically sought to preserve New York Times’ access to cash and has limited its borrowing, said Fitch Ratings media analyst Mike Simonton in Chicago, who doesn’t rate the debt. “It’s possible that their risk-tolerance has increased,” which would lessen the chances of a dividend cut.

New York Times spokeswoman Catherine Mathis said the company and Chairman Arthur O. Sulzberger Jr. declined to comment. The company balances shareholder value with borrowing costs and expects to keep its investment-grade rating, Chief Financial Officer James Follo said on a July 23 conference call.

Chief Executive Officer Janet Robinson has accelerated cost cuts and projects annual savings will surpass a target of $230 million by the end of 2009. In May, the New York Times said it eliminated 100 newsroom jobs.

Reducing debt, stabilizing revenue and an improving advertising market could also help the company maintain its credit rating, Moody’s Puchalla said.

Cash Flow

The dividend this year will exceed New York Times’ cash flow from operations minus capital expenses, Goldman Sachs Group Inc. analyst Peter Appert estimates. Next year it will eat up about 75 percent of estimated free cash flow as capital spending is reduced, he said.

“That’s probably too high,” said Appert, in San Francisco, who recommends selling the stock. “It doesn’t give them an awful lot of flexibility in terms of preserving cash for other uses.”

Chairman Sulzberger fended off shareholders last year who challenged the family’s voting control. The company’s largest investor is now Harbinger Capital Partners. The New York-based hedge fund placed two nominees on the board this year and raised its stake to almost 20 percent as of Aug. 1. Tripp Kyle, an outside spokesman for Harbinger, said the firm declined to comment.

The need to refinance a $400 million credit agreement, part of the company’s $1.1 billion in total debt, by May 2009 may force cash-freeing moves.

A downgrade “makes it potentially hard to refinance,” said Barclays Capital analyst Hale Holden in New York, who recommends a short credit position. “That’s complicated if you’re burning cash by paying the dividend.”

To contact the reporter on this story: Sarah Rabil in New York at [email protected]

Last Updated: August 12, 2008 09:38 EDT

>By JAN HOFFMAN

NYT May 4th 2008

ON school days at 2 p.m., Nicole Dobbins walks into her home office in Alpharetta, Ga., logs on to ParentConnect, and reads updated reports on her three children. Then she rushes up the block to meet the fourth and sixth graders’ buses.

But in the thump and tumble of backpacks and the gobbling of snacks, Mrs. Dobbins refrains from the traditional after-school interrogation: Did you cut math class? What did you get on your language arts test?

Thanks to ParentConnect, she already knows the answers. And her children know she knows. So she cuts to the chase: “Tell me about this grade,” she will say.

When her ninth grader gets home at 6 p.m., there may well be ParentConnect printouts on his bedroom desk with poor grades highlighted in yellow by his mother. She will expect an explanation. He will be braced for a punishment.

“He knows I’m going to look at ParentConnect every day and we will address it,” Mrs. Dobbins said.

A profusion of online programs that can track a student’s daily progress, including class attendance, missed assignments and grades on homework, quizzes and tests, is changing the nature of communication between parents and children, families and teachers. With names like Edline, ParentConnect, Pinnacle Internet Viewer and PowerSchool, the software is used by thousands of schools, kindergarten through 12th grade. PowerSchool alone is used by 10,100 schools in 49 states.

Although a few programs have been available for a decade, schools have been using them more in recent years as federal reporting requirements have expanded and home computers have become more common. Citing studies showing that parental involvement can have a positive effect on a child’s academic performance, educators praise the programs’ capacity to engage parents.

In rural, urban and suburban districts, they have become a new fact of life for thousands of families. At best, the programs can be the Internet’s bright light into the bottomless backpack, an antidote for freshman forgetfulness, an early warning system and a lie detector.

But sometimes there is collateral damage: exacerbated stress about daily grades and increased family tension.

“The good is very good,” said Nancy Larsen, headmaster of Fairfield Ludlowe High School in Connecticut, which uses Edline. “And the bad can become very ugly.”

At an age when teenagers increasingly want to manage their own lives, many parents use these programs to tighten the grip. College admission is so devastatingly competitive, parents say, they feel compelled to check online grades frequently. Parents hope to transform even modest dips before a child’s record is irrevocably scarred.

“I tell my son, ‘What you do as a freshman will matter to you as a senior,’ ” Mrs. Dobbins said. “ ‘It will haunt you or applaud you.’ ”

Depending on the software, parents can check pending assignments; incomplete assignments; whether a child has been late to class; discipline notices; and grades on homework, quizzes and tests as soon as they are posted. They can also receive e-mail alerts on their cellphones.

With some programs, not only is a student’s grade recalculated with every quiz, but parents can monitor the daily fluctuations of their child’s class ranking. The availability of so much up-to-the-minute information about a naturally evasive teenager can be intoxicating: one Kansas parent compared watching PowerSchool to tracking the stock market.

Kathleen DeBuys, a mother of four in Roswell, Ga., used to check her e-mail first thing in the morning: the ParentConnect alerts would fly in by 6 a.m. The subject line might read, “Claire has received a failing grade. …”

“And I’d freak out,” said Mrs. DeBuys, speaking of her oldest child, then a high school freshman. “I’d be waking her up, shouting: ‘Claire! What did you fail? What is wrong with you?’ She’d pull the pillow over her head and say, ‘Leave me alone!’ ”

Usually the explanation was benign: there was an inputting error, or Claire had missed the class because she had been sick or pulled out for a gifted-and-talented program. But the family’s morning was already flayed.

“It was horrible,” Mrs. DeBuys said.

Many students, in fact, like the programs, which let them monitor their records. Their biggest complaint is their parents’ unfettered access. “I don’t think kids have privacy,” said Emily Tarantino, 13, a middle-school student from Farmingdale, N.Y. “It’s not like anyone asked our opinion before they gave parents the passwords.”

In thousands of Facebook postings about the programs, teenagers bitterly denounce parental access as snooping. Emily Cochran, 18, a Pittsburgh senior, writes on Facebook about Edline, “It’s like having our parents or guardians stand over us and watch us all day at school, waiting for us to slip up.”

When teachers post scores before they return tests, parents may even see the grade before the students. On Facebook, in typical Internet shorthand, a teenager writes: “I walk into my house and I don’t even get a ‘hello son, howd your day go?’ I get yelled at bcuz I failed a test.”

Paradoxically, many parents who regularly check their children’s grades online fondly recall that during their own adolescence, subterfuge was a given. “I’ll admit it,” said Chris Tarantino, Emily’s mother. “I got satisfaction in fooling my parents.”

Programs like Edline do away with that sly pleasure. But Mrs. Tarantino, a PowerSchool fan, said the stakes had changed drastically. Academic pressure a generation ago was not nearly as all-consuming.

It is difficult to demonstrate conclusively what impact these programs have on school performance, because of all the variables. Anecdotally, principals report that the programs have motivated otherwise hard-to-reach parents and students. They have helped some middle-school boys, in particular, become better organized.

“Edline opens up communication between parents and teachers,” said Ron Jones, the principal at Huth Middle School, which has a 90 percent minority student population, in Matteson, Ill., a middle-class Chicago suburb. “It helps keep the children minding their p’s and q’s.”

The software can certainly be a boon to working parents. And divorced parents can log on without having to contact each other. A few years ago, India Harris, then a single mother and an Army staff sergeant from Omaha, monitored her son’s math grades while on duty in Iraq, and got him extra help.

In Noblesville, Ind., after a survey indicated that parents felt sufficiently informed by PowerSchool and subsequent e-mail exchanges with teachers, the middle-school principal canceled parent-teacher conferences this spring and gave the time back to classes.

Districts have different rules about who has access to which information. Parents then decide how much they want to know. Katie Mazzuckelli, a mother of twin seventh graders in Alpharetta, Ga., checks ParentConnect daily. “There are two types of parents,” she said. “They either do what I do and embrace it, or they say: ‘They’re in middle school and beyond, and they need to be independent. This is an invasion of their privacy.’ ”

Mrs. Dobbins of Alpharetta, a comfortable Atlanta suburb, checks ParentConnect even on weekends. Although there is only modest data on her fourth grader, she goes through the exercise to prepare the child for the scrutiny that her older children receive. She asks the sixth grader close questions about coming assignments.

And she reminds her high school freshman, whom she describes as a bright student with a tendency to coast, “ ‘My personal philosophy is that you need to be on your own, but if you fail to do your job, I will know about it,’ ” Mrs. Dobbins said.

When he does not turn in his homework, she makes sure it is done that night even if it is too late to get credit for it. “And through ParentConnect,” she said, “I’ll e-mail the teacher, ‘Please let me know if you don’t get it within the next day because that’s part of his punishment.’ ”

MRS. DOBBINS is unapologetic about her monitoring of her children’s schoolwork. “I know,” she said, “I’m the mom with big horns. But it’s been a fabulous parenting tool. I think every school should implement it, especially in high school, when kids don’t talk to parents and parents can’t talk to each teacher.”

The software, some educators say, can be misused as a surrogate for meaningful connection between families and schools. “Some teachers love it because it takes the burden of communication off them,” said Diana Brown, a high school English literature teacher in Georgia who still sends home the occasional handwritten note. “Their attitude is: ‘The parents should know what the kid’s grade is. It’s not my job to contact them.’ ”

Many parents may be confused by the complexity of scoring. Some bemoan that few teachers include comments or context. “There’s nothing telling you that your kid loves the class but isn’t a good test taker,” said Mary Kay Flett, a mother in Roswell, Ga.

Many districts do not educate parents about how to use the programs in a measured, judicious fashion with their children. That lapse is implicit in the angry, humorous and poignant Facebook postings. “My dad checks powerschool like 3 or 4 times a day,” writes one teenager. “Yeah he even came to my school once to tell me about it.”

From another teenager: “Before, the screaming and disappointment only had to be endured four times a year. Now it can happen every night.”

And this: “ive been grounded twice for the same grade … once when my mom found it on edline and again when I actually got the grade a week later.”

Some parents refuse to use the software, but many students check their grades to the point of obsession. Denise Pope, a Stanford lecturer who consults with secondary schools, worries that these programs can aggravate student anxiety. “When the focus is on the grade so much, you’re saying to kids, ‘It’s more important to get the grade, by hook or by crook, than learn the material,’ ” she said. “And that leads to the rise in rampant cheating.”

Some school districts are experimenting with restricting what information can be seen by parents of high school students. Other districts only post grades three weeks before the end of a marking period, to give students time to turn things around.

For many districts, the grade and attendance software is but a thread in a tapestry of programs, both online and off, to engage students as well as parents. Many teachers provide lively, interactive Web sites and online hours for help with homework.

The success of the online grading programs also depends on the willingness of teachers to update them accurately and to devote time to follow-up e-mail messages. “I’ve had teachers e-mail me, ‘There’s a test coming up, make sure they study certain things, make sure they have breakfast,’ ” Mrs. Tarantino said.

“Family involvement is not about serving parents,” said Joyce Epstein, director of the National Network of Partnership Schools. “It’s about mobilizing all the resources that support student success. These technologies can hurt or help, depending on how they are done. But the interpersonal connections of teachers, parents, students and counselors really are necessary to go beyond the impersonal technologies.”

One challenge she raises is equity. “Some parents do not have access to high-tech services,” said Dr. Epstein, a professor at Johns Hopkins. “Saying that those parents can use the computers at a local library is not equitable.”

These days, Mrs. DeBuys, the mother of Claire, now a graduating senior in Roswell, calls herself a “reformed ParentConnect parent.”

It took her several years to figure out how best to use the program. “You have to connect to it on your terms,” she said.

It can be hard to resist, she said. “It speaks to all your neuroses as a parent, all this need to control, that pressure to make sure everything is perfect,” she said. “How are these kids going to learn to be responsible adults?”

She has since turned off the reminders and the alerts. But she still checks ParentConnect a few times a week. To her freshman son she may say, “ ‘I notice you have three zeros for homework grades, so you need to talk to your teacher.’ ”

She laughed. “And in a perfect world,” she added, “he would.”

>BY NANCIE KATZ, BARBARA ROSS and DAVE GOLDINER
DAILY NEWS STAFF WRITERS

Monday, August 4th 2008, 10:18 PM

Prosecutors are investigating a politically connected Brooklyn lawyer and his wife for allegedly siphoning off “potentially millions” of dollars from unwitting clients, including crippled kids, sources said.

Steven Rondos, 43, and his lawyer wife, Camille Raia, 47, are suspected of stealing the money from so-called guardianship accounts set up for victims of medical malpractice and personal injury cases.

A source close to the case said many of the victims are children who suffered serious injuries in car crashes or other accidents. The couple manages accounts worth up to $50 million.

Rondos and Raia have an office in Bay Ridge and own a $1.4 million home in leafy Ridgewood, N.J. They have not been charged, and the Manhattan district attorney’s office refused to comment on the alleged scam, which sources said may have gone on for years.

Judges in several boroughs and counties have started removing Rondos and Raia from their positions of authority over the accounts.

“[Officials] are in the process of petitioning to remove Rondos,” said David Bookstaver, a spokesman for the city Office of Court Administration.

Rondos and Raia did not return calls for comment.

The alleged scam started unfolding when officials at brokerage firm Smith Barney, which manages several of the accounts, noticed unusual withdrawals.

[email protected]