S&P Lifts Belo’s Ratings

NEW YORK: Standard & Poor’s Ratings Services lifted its junk ratings on Belo Corp., on improving financials. Belo’s corporate credit rating was raised to BB- from B+. The rating on its $275 million in senior unsecured notes due 2016 at 7 percent was also raised to BB- from B+. S&P maintained Belo’s outlook rating of “stable.”

“The ratings upgrade reflects Belo’s improving operating trends and lower leverage, as well as increased headroom with its financial covenants,” said Standard & Poor’s credit analyst, Deborah Kinzer.

S&P noted Belo’s first-quarter results. Earnings were up 52 percent, and revenues were up nearly 16 percent.

“Similar to other TV station groups, Belo’s revenue and EBITDA turned around in the first quarter of 2010, aided by political advertising, higher core ad revenue, and lower operating expenses,” S&P’s notice said. “In addition, the company paid down debt balances with free cash flow, reducing debt by 3.4 percent during the quarter. Leverage improved to 5.5x--adjusted for leases and pension obligations--as of March 31, 2010, down from 6.7x at the end of 2009.”

S&P said its BB- junk rating “reflects the company’s still-elevated leverage, geographic and revenue concentration in Texas, strong station portfolio and diversification among network affiliations, and relatively good EBITDA margin compared with peers.”

Belo has 20 TV stations in 15 markets, but 41 percent of its revenues come from stations in Texas, which S&P regards as a geographic risk. Shares of the company (NYSE: BLC) are trading at around $7, up 28 percent year-to-date.
-- Deborah D. McAdams