Much of the bad news this week has focused on The New York Times, but all is not well over at the Wall Street Journal. Portfolio is reporting that the newsroom will be hit by cuts next week, which may total up to 50 persons (depending who is offered/takes a buyout). There apparently are also rumors of "parallel cuts at Dow Jones Newswires, and that one or more Journal bureaus may be eliminated as part of the cutbacks."

Meawhile PaidContent is reporting that Pali Research analyst Rich Greenfield has downgraded News Corp. from buy to sell.

His reasons include the usual — decreased earnings per share estimates for fiscal years 2009 and 2010; the possibility that COO Peter Chernin may not renew his contract, which expires midyear, more likely to Greenfield the longer it takes; hesitancy over stock buybacks. But his concerns also go to the heart of the company: Rupert Murdoch, chairman and CEO, who Greenfield now sees as a visionary without a strategy for many of News Corp.'s core businesses.

Carney: So, here's the story with analysts. There are ratings agencies, which mostly rate debt, and there are analysts, who mostly rate equities. So he's saying the equity is a sell. Meaning, "don't own these shares. Don't buy them. And sell what you have because they are going down." Ratings agencies are more important. (Sadly, because they suck too.)

What makes the agencies important is that a lot of institutional investors -- pension funds, university endowments, etc. -- have restrictions on what they can buy: basically, they are often prohibited from buying highly risky "junk" bonds. So if you get downgraded, your cost of borrowing goes way up. You have to pay more interest to people buying your bonds. This means your company loses even more cash. It helps to think of buying a bond as lending a company money, since that's basically what you are doing

FBNY: So the analyst rating is basically just for people who already own stock in the company? [We are not afraid to ask the stupid questions here at FBNY!]

Carney: Well, no. It can be for people thinking about buying stock too. But, analyst ratings carry much less weight because there are lots of analysts and they have different opinions. Also, big institutional investors aren't restricted in the same way when it comes to analyst equity calls. They can still buy or hold the stock that is rated a "sell" where they can't do that with bonds that are rated "junk."

So there you have it, not good, but also not junk!