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Rating Action:

Moody's Assigns B2 CFR to Newport Television; Outlook Stable

14 Apr 2008
Moody's Assigns B2 CFR to Newport Television; Outlook Stable

Approximately $890 million of debt rated.

New York, April 14, 2008 -- Moody's Investors Service today assigned a B2 Corporate Family Rating and a B2 Probability of Default Rating to Newport Television Holdings LLC ("Newport") and a Caa1 rating to its $100 million 10-year Senior Discount Notes. In addition, Moody's assigned a Ba3 rating to Newport Television LLC's, a subsidiary of Newport, $590 million senior secured credit facility ($75 million revolver due 2016 and $515 million term loan due 2016) and a Caa1 rating to its $200 million 9-year Senior PIK Toggle Notes. The ratings outlook is stable. Newport used the proceeds of the senior secured term loan, a $200 million opco senior interim loan (which is to be refinanced with the PIK Toggle Notes) and a $100 million holdco senior interim loan (which is to be refinanced with the Senior Discount Notes) along with $259 million of cash equity from the equity sponsor, Providence Equity Partners Inc., to acquire Clear Channel Communications, Inc.'s television station group. This is the first time that Moody's has assigned ratings to Newport Television Holdings LLC.

Moody's subscribers can find further details in the Newport Credit Opinion published on Moodys.com

Ratings / assessments assigned:

Newport Television Holdings LLC

Corporate family rating -- B2

Probability-of-default rating -- B2

$100 million Senior Discount Notes -- Caa1 (LGD 6, 94%)

Newport Television LLC

$590 million senior secured credit facility -- Ba3 (LGD 3, 30%)

$200 million Senior PIK Toggle Notes -- Caa1 (LGD 5, 81%)

The outlook is stable.

Newport's B2 rating reflects the company's significant debt to EBITDA leverage of 10.4x (based on 2007 EBITDA pro-forma for the expected cost savings and including Moody's standard adjustments), modest free cash flow relative to debt, weak operating margins relative to its broadcast peer group and execution risk associated with improving the operating performance and completing the sale of certain identified assets. The rating also incorporates Newport's relatively weak market share in several of its markets, the inherent cyclicality of the advertising business and the increasing business risk associated with declining trends in broadcast television audiences and increasing cross-media competition for advertising spending.

Newport's ratings are supported by the diversity in its geographic footprint and network affiliations and significant proportion of local advertising revenues. Moody's believes Newport stands to benefit from the experience of its management team in executing its strategy of improving the operating performance through cost control and increasing market share.

Newport's EBITDA minus capital expenditures to interest expense is expected to be weak. However, the financing structure offers some flexibility to the company in managing its cash interest costs. Newport has the ability to PIK interest on the $200 million senior notes for the first five years after closing. In addition, the company does not have any meaningful debt amortization over the intermediate term. The company also maintains a $75 million revolving credit facility which is expected to have moderate seasonal drawings.

Newport Television Holdings LLC, headquartered in Kansas City, Missouri, owns and operates 56 television stations (including 18 digital multicast stations) in 24 markets. The company's 2007 revenue was approximately $338 million.

New York
Shilpa Parandekar
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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