S&P: Gray Television on watch

Standard & Poor's said it placed its ratings on Gray Television Inc., including the B+ corporate credit rating, on CreditWatch with negative implications.

The agency said that the CreditWatch placement recognizes that Gray's leverage as of June 30 is meaningfully higher than the 6 times target leverage for the company at the B+ rating level.

When including preferred, leverage was 8.5 times, S&P said.

Although leverage has come down slightly since the company's fully debt-financed acquisition of a TV station at the end of 2005, Gray's ability to bring leverage within the target of 6 times by the end of 2006 remains uncertain, even as it stands to benefit from political advertising revenue, which will peak in the fourth quarter, the agency noted.

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