S&P cuts Radio One outlook to negative

Standard & Poor's said it revised its outlook on Radio One Inc. to negative from stable.

The ratings on Radio One, including the BB- corporate credit rating, were affirmed, the agency said.

The outlook revision to negative recognizes that Radio One's debt to EBITDA ratio of 6.2 times at March 31 is meaningfully higher than its 5.5 times target debt to EBITDA ratio for the company at the current rating level, S&P noted.

S&P said the rating on Radio One reflects financial risk from aggressive, largely debt-financed station purchases, ongoing expansion, particularly in large markets, where unprofitable stations can be costly, increased competition from traditional and nontraditional media and advertising cyclicality.

These factors are only partially offset by Radio One's good competitive position targeting the African-American audience, radio broadcasting's high margin potential and good discretionary cash flow-generating capabilities and resilient station asset values, the agency said.

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