Standard & Poor’s cut its credit rating outlook for the Washington Post Company to “negative” from “stable” and Moody’s Investors Service did likewise. Even though the company now derives a lot of its revenues from sources other than advertising, primarily its education business, S&P is still worried about the ad downturn.
“Our concern is that ongoing weak economic conditions over the intermediate term would continue to meaningfully exacerbate secular rates of ad revenue decline over at least the next year, and could potentially require the company to absorb losses in the newspaper and magazine segments,” S&P said, adding that the weak economy is also likely to affect ad revenues for the company’s television group as well.
“The negative rating outlook reflects Moody’s concern that acquisition activity over the next several years — including the pending purchase of Miami’s NBC affiliate — could sustain leverage at levels that are already weak for the A1 rating,” said Moody’s.
Seeking to look on the bright side, the Washington Post Company issued a statement noting that both S&P and Moody’s had reaffirmed its current credit ratings.