Radio Represented Heavily On Moody's 'Bottom Rung' List

Media Is The Largest Section Of "The Bottom Rung"

Pilloried for missing credit problems in the nation's mortgage markets, credit-ratings firm MOODY'S INVESTORS SERVICE is trying to get ahead of corporate bankruptcies, reports THE WALL STREET JOURNAL. The firm is publishing a list called "The Bottom Rung," detailing the companies that MOODY's says are most likely to default on their debts.

With 283 companies, the list holds nearly every sector of the economy. The dominant industries on this at-risk list include much of the U.S. auto industry, the casino sector and many retail chains, newspapers and broadcast-TV and radio-station networks. In fact, almost all broadcast companies are included on the list, including CITADEL, CMD SUSQUEHANNA, CUMULUS, EMMIS, MILLENIUM NJ, NEXT MEDIA, RADIO ONE, REGENT, SALEM, SIRIUS XM, SBS and UNIVISION. 

Yet MOODY's is pushing into a gray zone, singling out some firms that say they're in decent fiscal health. UNIVISION COMMUNICATIONS said, "UNIVISION has more than ample liquidity to operate the business in the current environment and has sufficient cash on hand to meet all obligations and debt maturities." 

Interestingly, neither CC HOLDINGS, CBS, nor COX RADIO are on the list. Why?

COX Pres./CEO BOB NEIL told ALL ACCESS, "“COX has historically been conservative on debt. I remember just over a year ago at a conference, when I was asked why were focused on debt repayment and share repurchases instead of offering a dividend, I said we liked the idea of 'paying down our mortgage' better. Five or six years ago everyone was telling us we were crazy for not leveraging ourselves more. As we’ve seen, the public markets are fickle lovers, and the 'conventional wisdom' on WALL STREET can change very quickly. COX ENTERPRISES is over 100 years old, and we’ve been through a lot of economic up’s and down’s over that time, so that proves the conservative approach usually wins out over the long term.”

MOODY's estimates about 45% of its "Bottom Rung" companies will default on debt in the next year. Applying the methodology used retroactively to 2008 would have yielded about 157 companies, MOODY's officials said, 60 of which would have eventually defaulted.

"Even though it seems like we've had a lot of defaults already, this shows we aren't even close to the peak. There is a lot of bad news to come," said MOODY'S SVP/Corporate Finance DAVID KEISMAN. "Our thought was that in this cycle, with all that's happened, we are going to have a lot of bad news. What we can't have is surprise bad news."

The full list and additional information can be found at THE HUFFINGTON POST website.

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