S&P revises Cablevision Systems to negative

Standard & Poor's cut its outlook on Cablevision Systems Corp. and unit CSC Holdings Inc. to negative from stable. S&P affirmed the existing ratings, including CSC Holdings' senior unsecured debt at BB+, its subordinated debt at BB- and its preferred stock at B+.

S&P said it revised the outlook because of the company's aggressive digital rollout plans and its expectation that the company will need to use additional debt to finance most of this plan, which would result in weak financial metrics for the rating in 2002.

"The capital and operating expenses associated with the expected full introduction of digital services in 2002 is expected to require additional borrowings, especially since Cablevision canceled a planned preferred stock offering in early 2001 due to poor market conditions," S&P said. As a result, the rating agency anticipates total debt to EBITDA in the 7.7 times to 8.0x range on a consolidated basis during the 2001 to 2002 time frame, excluding collateralized debt from monetization of its common stock in other companies, such as AT&T Corp. and AT&T Wireless Services Inc.

Moody's cuts Emmis outlook to negative

Moody's Investors Service revised its outlook on Emmis Communications to negative and confirmed the company's ratings, including Emmis Operating's $1.3 billion of bank credit facilities rated Ba2, Emmis Operating's $300 million of 8 1/8% senior subordinated notes due 2009 rated B2, Emmis Communications' $200 million of senior discount notes due 2011 rated B3. Moody's downgraded Emmis Communications' $144 million of cumulative convertible preferred stock to Caa1 from B3.

Moody's said it cut the outlook because of the impact of the "persistently weak advertising market on Emmis' future performance, particularly given the company's already high leverage and modest cashflow coverage of interest and capital expenditures. The extension of a weak advertising market, the potential for weakness in local markets and a recessionary economy have put the company's current ratings in jeopardy."

While Emmis' television and radio revenues grew year over year, Moody's said this was primarily driven by acquisitions.

It added: "Emmis is not currently experiencing the benefits of diversity, because the company has suffered weakness across all of its operating segments."

Moody's also said it expects the company will need to amend the total leverage covenant in its bank facilities for the third and fourth quarters.

Moody's rates new ResCare notes at B2

Moody's Investors Service assigned a B2 rating to ResCare, Inc.'s planned offering of $150 million of senior notes due 2008. It also rated the company's new $80 million senior secured revolving credit facility due 2004 at Ba3. Outstanding ratings were confirmed, including the B3 rating on its 6.0% convertible subordinated notes due 2004. The outlook is stable.

Moody's said the ratings reflect "ResCare's high leverage and modest cash flow, the deterioration in operating performance due to increasing expenses and the company's heavy reliance on reimbursements from government sources."

The rating agency also noted "the high level of competition in the services market for individuals with mental retardation or other developmental disabilities (MR/DD) and for at-risk and troubled youths. Mitigating factors include the company's leading position in the MR/DD market, positive demand trends for services, the diversification of revenue streams geographically, the shift in strategy away from acquisitions, along with those risks associated with this strategy, and the increase in financial flexibility following the financing."

Moody's said it anticipates the company's performance will stabilize over the coming quarters.

S&P downgrades SpectraSite notes to CCC+ from B-

Standard & Poor's downgraded SpectraSite Holdings Inc.'s notes to CCC+ from B-.

Ratings affected include the $400 million senior notes due 2010, the $559.8 million senior discount notes notes due 2010, the $587 million 11.25% senior discount notes due 2009, the $225 million 12% senior discount notes due 2008, the $200 mil 6.75% senior convertible notes due 2010 and the $200 million 12.5% senior unsecured notes due 2010.

Moody's confirms Payless bank debt at Ba1

Moody's Investors Service confirmed its rating on Payless ShoeSource Finance, Inc. includings its Ba1 bank debt rating. The outlook remains positive.

Moody's said the ratings reflect "the strength and consistency of Payless' market share; its well-established brand names, national scope, and geographic diversity; and effective merchandising and allocation systems. The ratings also reflect the expectation that Payless will continue to experience lower volatility to fashion and economic risk than other apparel companies due to its low to moderate price points and consistent shopping patterns of its core customer base."

Moody's said it expects Payless will maintain a conservative financial policy that will remain focused on debt reduction.

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