http://www.nypost.com/seven/02022009...ion_153124.htm
PENSION TENSION
GRAY LADY'S $625M DEFICIT ADDS TO PUBLISHER'S WOES
By HOLLY M. SANDERS and KAJA WHITEHOUSE
Just when it started to look as if The New York Times Co. had found a way to dig itself out from under its massive debt load, the beleaguered newspaper company may be on the verge of getting knocked down again.
The cash-strapped publisher last week reported that its pension plan was facing a $625 million shortfall at the end of 2008, compared with a deficit of $48 million a year earlier.
Without a significant recovery in the markets, the owner of the Gray Lady could be forced to sink in millions more to shore up the plan, starting in 2010.
The pension news gave investors another reason to fret about the Times' precarious financial position. And it pushed analysts like Citigroup's Catriona Fallon to further question the company's cash position.
More than $1 billion in debt is looming over the ad-starved company, which was forced to get a $250 million loan from Mexican billionaire Carlos Slim at a steep 14 percent interest rate, to put its stake in the Boston Red Sox up for sale and to negotiate the sale of part of its brand-new Eighth Avenue headquarters.
Now, the company is getting socked again by the financial crisis and subsequent market turmoil as it wreaks havoc on its pension plan. To be sure, the Times doesn't owe billions in retirement benefits like the Big Three automakers, but it's one of hundreds of US companies suffering from a severe pension squeeze.
According to Joe McDonald, a pension expert at consulting firm Hewitt Associates, the 500 companies in the S&P index started 2008 with a $29 billion surplus in their pension plans, but ended it with a $746 billion deficit. "Pension plans are invested heavily in the stock and bond markets, neither of which performed well in 2008," McDonald said.
The Times reported needing $1.6 billion to meet its pension obligations as of the end of 2007, according to public filings. At the time, the fund was short by only $48 million. Now the deficit has ballooned thirteen-fold to $625 million.
On a conference call with analysts, Times executives emphasized they won't have to deal with higher contributions until 2010, at which point the economy could start to recover.
Moreover, Chief Financial Officer James Follo suggested the government could offer legislative relief, such as allowing companies more time to replenish their pension funds.
"Quite frankly, I would be surprised if there wasn't some government intervention because I don't think this is a unique issue," he said.
Congress has already written some relief into the pension law passed in 2006, which included stricter rules for dealing with underfunded pensions.
Under those rules, if a company's pension plan falls below a certain funding level then the plan can be frozen, meaning the employees stop earning some or all of their benefits.
