Fitch downgrades Tribune

Fitch Ratings said it downgraded Tribune Co.'s issuer default rating to CCC from B-, its senior guaranteed revolving credit facility and senior guaranteed term loan to CCC/RR4 from B/RR3, its senior unsecured bridge loan and senior unsecured notes to CC/RR6 from CCC/RR6 and its subordinated exchangeable debentures due 2029 to CC/RR6 from CCC-/RR6.

The outlook is negative.

The agency said the downgrade and negative outlook reflect the acceleration of declines in newspaper advertising revenue and cash flow at Tribune; the company's continued weak operating and financial results; limited visibility regarding the likelihood, timeframe and magnitude of a potential reversal of these negative trends; and limited flexibility around Tribune's 9 times guaranteed leveraged covenant. Fitch calculates the ratio to be in the low-to-mid 8 times range at June 30.

Cost cuts in the first half of 2008 should help in the intermediate term, Fitch predicted, but the agency said that even more action may be necessary to offset the rapid erosion of advertising dollars.

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