paidContent.org - Fitch Highlights Newspapers' Credit Problems; Sticks Liberty Media On Watch List

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David Kaplan

paidContent.org
Thursday, January 8, 2009; 2:07 PM

Newspapers in general and cable company Liberty Media (NSDQ: LINTA) come out mostly negative in credit-rating agency Fitch's first Media & Entertainment Quarterly Report (PDF, free registration req.).

In addressing specific concerns about The McClatchy Company (NYSE: MNI), which saw its stock hit an all-time low in Q4, Fitch cites its "inability to deleverage even after repaying significant debt." In September, McClatchy renegotiated $1.175 billion of debt, which includes bank loans and available lines of credit, giving it a bit more flexibility. Its total debt was $2.07 billion at the end of Q3. Fitch expressed similar worries about Dallas-based Belo Corp. (NYSE: BLC), which the ratings agency attributed its negative outlook to the company's reduced liquidity after refinancing $350 million. As for The Tribune Company, which filed for bankruptcy last month, the outlook was listed as "not applicable."

In the case of cable company Liberty Media, which expects its proposed split-off of DirecTV and other assets to be completed by May, Fitch is worried about its business mix and overall capital structure. Looking at the rest of the industry's Q3, Fitch painted a largely stable credit picture. Even ad holding companies Interpublic Group and Omnicom were deemed "positive" and "stable," respectively, due to the "scalable cost structure and ample liquidity" for both, despite the exposure to auto companies' woes and the general pullback in spending from marketers and consumers.

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