Moody's lowers Regent

Moody's Investors Service said it downgraded Regent Broadcasting LLC's corporate family rating to B3 from B2, probability of default rating to Caa1 from B3, and speculative-grade liquidity rating to SGL-4 from SGL-3.

Moody's said it expects radio broadcasting revenues, which are highly reliant on cyclical advertising, 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 by several industries.

Despite these concerns with the radio broadcasting industry, Regent has performed better than its rated peers and Moody's said it expects that this trend could persist through the advertising downturn in part due to its strong market positions and below average exposure to the automotive industry.

The depth and severity of the expected decline nevertheless exceeds the cyclicality built into the B2 corporate family rating, Moody's added, noting that it expects that mid to high single digit revenue declines will likely pressure Regent's ability to maintain adjusted leverage in the low 7 times range as assumed by the prior B2 rating.

The SGL-4 reflects concern over Regent's ability to comply with tightening financial covenants under its bank credit facility, the agency said, adding that the B3 corporate family rating reflects Regent's significant leverage, concern over its ability to comply with financial covenants, and the maturity and inherent cyclicality of the radio industry.

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