Moody's lowers Washington Post

Moody's Investors Service said it downgraded Washington Post Co.'s senior unsecured note rating to A2 from A1 and confirmed the company's Prime-1 commercial paper rating, concluding the review for downgrade begun on Aug. 17.

The outlook is negative.

The downgrade reflects expectation that proposed Department of Education gainful employment guidelines regarding access to Title IV student loans for private for-profit educational institutions and the implementation of operating strategies to reduce Title IV student loan default rates will negatively affect the earnings of Kaplan, which is the company's largest operating segment, according to the agency.

Moody's said it expects Kaplan's EBITDA to begin to decline in the fourth quarter and drop by 255 to 35% in 2011, leading to an increase in debt-to-EBITDA leverage to a high 1x range in 2011 from 1.5x as of July 4.

Ratings reflect good cash flow generated from a diverse portfolio of businesses and a conservative financial orientation that has sustained low leverage, the agency said.

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