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Two more face possible Moody's downgrades

With the New York Times Company already facing a possible debt ratings downgrade (3/20/06 RBR #55), two more companies with operations in both newspapers and broadcasting are facing possible downgrades by Moody's Investors Service. The ratings firm has placed Tribune Company's 500 billion in senior unsecured long term debt on review (but not its commercial paper), along with both the senior unsecured long term debt and commercial paper of the E.W. Scripps Company, which total 1.1 billion.

The review at Tribune is based on the overall weakness of the newspaper industry and Tribune's "high debt burden." At Scripps, the trigger for Moody's review was its announced 366 million bucks acquisition of uSwitch (3/17/06 RBR #54)


Regarding Tribune: "Moody's Investors Service has placed Tribune Company's A3 senior unsecured long term debt ratings on review for possible downgrade. The review does not include Tribune's P-2 commercial paper rating.

The review is prompted by Moody's ongoing concerns about the outlook for the newspaper sector, combined with increased event and execution risk as well as Tribune's high debt burden versus operating cash flow for its A3 rating following the debt financed Matthew Bender and Mosby tax liability. This liability, coupled with weakening market conditions and overall weakening fundamentals in the newspaper industry, have challenged Tribune's ability to maintain expected credit metrics. Moody's believes

that fundamentals in the newspaper sector will remain weak for the foreseeable future; of particular concern is the continuing downward trend in circulation and intensifying competition from online rivals.

The review will focus on Tribune' ability and commitment to materially reduce debt over the next eighteen to twenty four months, and its ability to improve its operating trends and margins. The company's ability to mitigate event and execution risks surrounding the newspaper industry will also be considered in the review process. Moody's will examine the likelihood that Tribune's investments in digital media will sufficiently offset potential declines in its core print business as well as the longer-term competitive pressures on print and broadcast media from lower cost media, particularly the effect of internet based searchable database services on classified volume and pricing.

Tribune Company, headquartered in Chicago, Illinois, is a leading media company with operations in television and radio broadcasting, publishing, education and interactive services."

Regarding Scripps: "Moody's Investors Service placed The E.W. Scripps Company's ("Scripps") A2 senior unsecured and Prime-1 commercial paper ratings on review for possible downgrade following the company's announced agreement to acquire uSwitch.com for a cash purchase price of approximately USD366 million that Scripps intends to fund with commercial paper.

Moody's review will focus on how Scripps' acquisition strategy and competition for advertising revenues in the company's newspaper, broadcast and cable network properties affects the business risk profile relative to future cash generation potential. Moody's will consider the execution and financial risks associated with Scripps' strategy of diversifying into new lines of business through debt-financed acquisitions. In addition, Moody's will evaluate the company's liquidity position including the level of backup for commercial paper, debt maturities and other potential cash obligations.

The E.W. Scripps Company, headquartered in Cincinnati, is a media concern with interests in national lifestyle cable television networks, newspaper publishing, broadcast television stations, electronic commerce, interactive media, and licensing and syndication."





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