Moody's cuts Entercom

Moody's Investors Service said it downgraded the corporate family and probability-of-default ratings for Entercom Radio LLC to B1 from Ba3 and its 7 5/8% senior subordinated notes to B3 (LGD6, 94%) from B2 (LGD6, 93%) and changed the outlook to negative from stable.

The agency said it expects radio broadcasting revenue to come under increasing pressure due to the slowdown in consumer spending, its impact on corporate profits and the resulting cutbacks in advertising and marketing budgets.

Entercom's B1 corporate family rating reflects the maturity and inherent cyclicality of the radio industry, high leverage and some concentration of revenue in its highly competitive top five markets, the agency said.

Strong EBITDA margins and the capacity to generate free cash flow, despite weak industry fundamentals, along with geographic and format diversity, support ratings, the agency noted.

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