Consultant Mutter Creates ‘Default-O-Matic’ For Debt-Ridden Chains

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By: E&P Staff

What newspaper company is most in danger of defaulting? The Default-O-Matic knows.

San Francisco-based newspaper and new media consultant Alan Mutter created the handy graphic Tuesday to chart “the many degrees of defaultness” — a word he also created on his blog “Reflections of a Newsosaur.”

The Default-O-Matic, Mutter says, is a “simple tool … to help you see at a glance the degree of financial peril faced by 10 of the largest publishing companies.”

The graphic uses credit ratings from Moody’s Investors Service and calculates the chances of default.

The “shakiest’ company, according to the Default-O-Matic? It’s Journal Register Co. running away, with a 72.9% likelihood of defaulting on its debt. Moody’s rates Journal Register’s bonds at a deep-in-junk-territory Caa3.

Morris Publishing Group, with a 35.7% probability of default, and MediaNews Group Inc. and Tribune Co., both with a 26.4% chance of default, are also on the grim side of the Default-O-Matic.

Six of the 10 companies Mutter is tracking are in junk-bond territory.

“The Washington Post Co., which derives the majority of its revenues from things other than newspaper publishing, is the strongest credit at A1, representing a default risk of just 0.2%,” Mutter writes in his blog. “Scripps, (E.W. Scripps Inc.) which also is highly diversified away from newspapers, is the second-strongest credit. And Gannett, which has lots of newspapers but comparatively modest debt, is the third-strongest.”

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