MEDIA GENERAL INC.

Media General credit rating cut and stock goes up - strange markets

Posted by Marshall77

on Thu 10/27/2011 6:42 AM

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We expect U.S.-based diversified media company Media General's credit metrics and discretionary cash flow to deteriorate over the next couple of quarters because of declining publishing revenue and the absence of meaningful political advertising reuters reports.

-- Pressures on revenue, combined with tightening covenants, could lead to a covenant violation in late 2012.

-- We are lowering our corporate credit rating on the company to 'CCC+' with a negative outlook from 'B-'.

-- The negative outlook reflects the possibility of a late-2012 covenant violation.

Oct 26 - Standard & Poor's Ratings Services today lowered its corporate credit on Richmond, Va.-headquartered Media General Inc. (MEG) to 'CCC+' from 'B-'. The downgrade reflects our expectation that Media General could face difficulties in maintaining covenant compliance in 2012. We also lowered our issue-level rating on the company's $300 million senior notes due 2017 to 'CCC+' (at the same level as the 'CCC+' corporate credit rating on the company).

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