S&P Rates Outlook On Clear Channel As Negative

10-15-2012

After the announcement Friday that Clear Channel would be repackaging debt, Standard and Poor's Ratings Service has affirmed its negative outlook on the company. "The negative outlook reflects CC Media's high debt leverage and low interest coverage metrics, which we believe will have to dramatically improve for the company to have flexibility to meet 2016 debt maturities." On Friday, Clear Channel announced plans to issue $2 billion of priority guarantee notes due 2019 in exchange for $2 billion of its bank debt due in 2014 and 2016.

The rationale behind the Standard & Poor's Ratings Services' rating on Clear Channel, "reflects the company's steep debt leverage and significant 2016 debt maturities. The proposed transaction extends about $2 billion of debt from 2014 and 2016 to 2019 and reduces 2016 maturities from $12 billion to a little over $10 billion. However, the interest rate on the new debt is about 5% higher than the existing term loan B debt. As a result, we expect that EBITDA coverage of interest will be very thin at about 1.2x and that discretionary cash flow will be only modestly positive in 2013, hindering the company's ability to repay debt and afford additional refinancing transactions with similar interest rate increases. The transaction increases the company's flexibility to repay 2014 maturities (currently $1.5 billion), which previously could only be repaid on a pro rata basis, and now permits the company to exchange and extend $3 billion of additional loans. We still view a significant increase in the average cost of debt or deterioration in operating performance for either cyclical, structural, or competitive reasons, as major risks as the company proceeds with a strategy to deal with its 2016 maturities. We view CC Media's financial risk profile as 'highly leveraged' (based on our criteria), given its significant refinancing risk, narrow EBITDA coverage of  interest expense, and minimal discretionary cash flow compared with its debt burden. CC Media has a 'fair' business risk profile, because of its position as the largest global outdoor advertising company and largest U.S. radio station operator."

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Gray To Be Part Of 2013 Advertising Outlook Panel

8-28-2012

Katz Radio Group President Mark Gray will be part of a panel discussing next year's advertising outlook. The event, Media Outlook 2013, is organized by the Media Financial Management Association. Gray will be on the panel with TVB President Steve Lanzano, SVP Marketing & New Business Development for NCC Media Andrew Capone, and Houston Chronicle President John O?Loughlin. The event will be held Thursday, September 13 at Hearst Tower in New York City.

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Ford Raises Outlook for 2012

4-5-2012

A solid first quarter for auto sales has given Ford the confidence to raise its 2012 forecast. The company now says Ford expects U.S. auto industry sales for the year to be between 14.5 million and 15 million vehicles, up from between 13.5 million and 14.5 million. At Ford, sales jumped 9% this year through March, the auto industry as a whole is up 13%. Last year 12.8 vehicles were sold.

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Analysts Reduce Auto Sales Outlook

An indecisive economy is forcing analysts to do a downward revision for auto sales for the balance of 2011 and 2012. J.D. Power and Associates today trimmed its estimate for 2011 light vehicle sales to 12.6 million from 12.9 million units, and its 2012 outlook has been cut to 14.1 million from 14.6 million units. Not much positive has happened since politicians got themselves in a debt ceiling tug-of-war. A battle neither side won and consumers were the ones that fell in the mud. An S&P downgrade was followed by a bi-polar stock market. And once the negative self-talk about the economy begins, unfortunately is seems to pick up steam rather than hit a rick wall, even though the balance sheets of most businesses are a lot better than they were back in 2008.

There's way too much talk of a double-dip recession as opposed to a vibrant butt-kicking economy humming on all cylinders. The last thing the radio industry needs now is a pull-back in automotive advertising, not when they are about to battle some very hefty political comps (see previous story) that will most certainly be hard to match. In a survey by The Wall Street Journal over the past week, 46 economists polled put the odds that the U.S. is already in another recession at 13 percent, while they peg the chances of another recession in the next year at 29 percent -- up from 17 percent only a month ago.

Here are some other stats (source: Automotive news)
- IHS Automotive reduced its estimate for U.S. auto sales in 2011 by 200,000 units to 12.5 million light vehicles.
- IHS analyst Rebecca Lindland said the forecasting group also cut its estimate for 2012 deliveries in the U.S. to 13.5 million vehicles, from 14.7 million.
- The Massachusetts-based researcher also lowered its estimate for light-vehicle sales in 2013 to 15 million, from 15.5 million.
- Light-vehicle sales rose less than 1 percent in July, spurring some analysts to lower their outlook for 2011 industry sales.
- JPMorgan Chase & Co. last week reduced its estimates for 2011 and 2012 by a combined 700,000 vehicle sales.
- General Motors and Ford Motor Co. -- citing signs of weaker economic growth -- recently indicated they expect 2011 sales to come in at the low end of a range of 12.5 million to 13.5 million units.
- Industry sales are up 11 percent this year through July, though growth has slowed in recent months because of inventory shortages following the March earthquake in Japan, rising gasoline prices and overall economic uncertainty.
- A drop in discounts and higher new vehicle prices have also discouraged some buyers, analysts say.

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