Canwest Media downgraded
Source : Toronto Star
DBRS lowers credit rating to 'highly speculative' as firm struggles with heavy debt, weak ad market
November 29, 2008
Canadian Press
DBRS has lowered the credit ratings of Canwest Media Inc., a subsidiary of Canwest Global Communications, to reflect "ongoing pressure" from a weak advertising market and its high debt levels.
The downgrade announced yesterday reflects DBRS's view that deterioration of the advertising market will pressure cash flow at Canwest's television and newspaper subsidiaries in Canada and Australia.
This "could put Canwest Media into a negative free cash flow position by the end of fiscal 2009," DBRS said.
DBRS lowered Canwest Media's issuer rating from BB – already a speculative level below investment grade – to B (high), characterized as highly speculative.
Canwest Global announced two weeks ago that it had a $1.02 billion loss in its latest quarter, primarily due to a writedown of Canadian television operations.
Canwest chief executive Leonard Asper said at the time that the Winnipeg-based company, which employs about 10,500 people in Canada, would do whatever is necessary to improve its financial performance. Canwest Global recently cut 560 jobs.
The rating agency took note of recent cost-cutting, which will save about $47 million in the current year, but said it was insufficient to maintain the previous rating given Canwest's debt level.
TV broadcasters have been squeezed by the loss of advertising revenue linked to the slumping economy, rising competition from specialty channels and competition for advertisers from the Internet.
© Toronto Star
DBRS has lowered the credit ratings of Canwest Media Inc., a subsidiary of Canwest Global Communications, to reflect "ongoing pressure" from a weak advertising market and its high debt levels.
The downgrade announced yesterday reflects DBRS's view that deterioration of the advertising market will pressure cash flow at Canwest's television and newspaper subsidiaries in Canada and Australia.
This "could put Canwest Media into a negative free cash flow position by the end of fiscal 2009," DBRS said.
DBRS lowered Canwest Media's issuer rating from BB – already a speculative level below investment grade – to B (high), characterized as highly speculative.
Canwest Global announced two weeks ago that it had a $1.02 billion loss in its latest quarter, primarily due to a writedown of Canadian television operations.
Canwest chief executive Leonard Asper said at the time that the Winnipeg-based company, which employs about 10,500 people in Canada, would do whatever is necessary to improve its financial performance. Canwest Global recently cut 560 jobs.
The rating agency took note of recent cost-cutting, which will save about $47 million in the current year, but said it was insufficient to maintain the previous rating given Canwest's debt level.
TV broadcasters have been squeezed by the loss of advertising revenue linked to the slumping economy, rising competition from specialty channels and competition for advertisers from the Internet.
© Toronto Star
