S&P Mulls Downgrading CC Media

Considering Lowering Credit Rating On Clear Channel

STANDARD & POOR'S Ratings Services warned it is considering lowering its credit ratings on CC MEDIA HOLDINGS INC. further into junk territory, saying weak advertising demand in the radio industry and pressure on outdoor advertising will hurt the company's first-quarter results, reports THE WALL STREET JOURNAL, which writes "CC MEDIA, the entity through which private-equity firms BAIN CAPITAL PARTNERS LLC and THOMAS H. LEE PARTNERS LP acquired CLEAR CHANNEL COMMUNICATIONS in JULY for $17.9 billion, is expected to report results MAY 11th.

"CLEAR CHANNEL, suffering like other media companies from declining ad revenue, borrowed the remaining $1.6 billion under a $2 billion revolving credit line earlier this year, citing concerns about the state of the credit markets. That move raised fears on WALL STREET that the radio-station giant was choosing to access the funds for fear it won't be able to if it breached covenants.

"The ratings firm, which placed CC MEDIA's B- corporate credit rating on watch for downgrade, said its warning reflects the potential for a covenant violation late this year if operating trends don't improve meaningfully. B- is six notches below investment-grade territory and on the brink of highly speculative status. S&P last lowered its ratings on the company in FEBRUARY.

"S&P noted CC MEDIA's preliminary revenue declined 23% in the first quarter and adjusted earnings dropped 56%, including restructuring charges, slightly worse than the ratings firm's expectations.

"Last week, CC MEDIA said it was laying off about 590 people in its radio division and suspending its 401(k) company match. The layoffs target such areas as programming, engineering and customer service. They come on top of 1,850 layoffs in JANUARY, which mostly affected sales."

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