Moody's drops Granite Broadcasting

Moody's Investors Service said it lowered Granite Broadcasting Corp.'s corporate family rating to Caa2 from Caa1 and preferred stock rating to C from Ca following the company's announcement that it intends to market its two WB affiliate stations while AM Media Holdings LLC evaluates is interest in purchasing these assets in light of the likely loss of the WB affiliation when the network ceases operations in 2006.

Additionally, Moody's said it affirmed the B3 rating on the company's senior secured notes.

The outlook remains negative.

The agency said the downgrade to the corporate family rating reflects Granite's worsening liquidity position, $22 million of unrestricted cash on hand as of September, and Moody's belief that the company will be unable to cover debt service requirements and maintenance capital expenditures with internally generated funds over the next 12 months.

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