Reuters is reporting this afternoon that parent company of WKYC, Gannett Co., has been downgraded to "junk status".
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NEW YORK, March 2 (Reuters) - Standard & Poor's on Monday cut Gannett Co's (GCI.N) ratings to junk status, citing worsening prospects for ad spending at the largest U.S. newspaper chain.
S&P also warned that some lenders could recover only a negligible amount of their investment if the company defaults.
Gannett's rating had been in danger of slipping to junk since the publisher of USA Today posted a 36 percent decline in ad revenue in the fourth quarter. A downgrade to junk status can significantly increase a company's borrowing costs.
Gannett's bonds fell significantly after the downgrade. Its 6.375 percent notes due in 2012 fell to about 62 cents on the dollar, down about 2.5 cents, according to MarketAxess.
Ad spending is expected to decline further this year in both Gannett's newspaper and broadcasting businesses, S&P said in a statement. Unfunded pension obligations have also been rising, and the company is likely to face an extended period of cyclical pressure, the rating agency said.
S&P cut Gannett's corporate credit rating by two notches to "BB," the second-highest junk rating, from "BBB-minus." The outlook is negative, meaning another rating cut is likely within the next two years.
S&P cut Gannett's senior unsecured rating by four notches to "B-plus," the fourth-highest junk rating, partly reflecting expectations of negligible recovery of zero to 10 percent in the event of default. The agency withdrew its "A-3" commercial paper rating on the company.
Gannett last week said it would cut its quarterly dividend by 90 percent in response to the global recession and tightening credit markets.
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Courtesy: Reuters
