Fitch Ratings on Thursday cut its ratings on McClatchy Co (MNI.N: Quote, Profile, Research) deeper into junk territory, citing the newspaper publisher's declining revenues.
McClatchy reported a more than 40 percent drop in quarterly profit on Thursday as advertising revenue plunged. The company, which publishes The Miami Herald and The Sacramento Bee, said it expected advertising and revenue to remain weak in the near future.
"Over the longer term Fitch continues to anticipate that McClatchy will be challenged to generate meaningful and consistent revenue growth and remains cautious regarding newspaper companies' prospects for capturing and monetizing the significant volume of advertising dollars that are migrating toward the internet," Fitch said in a statement.
"While still generally comfortable with McClatchy's willingness to repay debt, this weakening of earnings before interest, taxes, depreciation and amortization and free cash flow has hindered the company's ability to meaningfully reduce leverage with free cash flow going forward," Fitch added.
Fitch cut McClatchy's senior unsecured debt three notches to "B," five levels below investment grade, from "BB." The outlook is negative, indicating an additional rating downgrade may be likely over the next one-to-two years.
McClatchy MNI shares were down 4.8 percent in trading on Thursday.
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