S&P Cuts Belo Rating On Newspaper Spin-off

By: E&P Staff As Belo Corp. prepares to spin off its newspapers at the end of the week, Standard & Poor's Rating Services on Monday lowered the Dallas media company's corporate credit and unsecured debt ratings deeper into speculative territory on concerns about the standalone television business is taking on all existing debt.

S&P downgraded Belo to "BB" from "BB+" and said its outlook is stable. Both designations are at the high end of ratings with speculative characteristics.

In addition to its concern that Belo, as a pure-play television and electronic media business, is taking on all present debt, S&P said spinning off the newspaper business into a new company called A.H. Belo gives it less asset flexibility.

Last week, Moody's Ratings Services is confirmed Belo's investment-grade ratings on its corporate family rating, probability of default rating, and senior unsecured note ratings, saying it believed the television business' strong profit margins and good cash flow can absorb the increased debt.

A.H. Belo is expected to formally launch as a publicly traded company on Friday.