Moody's lowers Salem Communications

Moody's Investors Service said it downgraded Salem Communications Holding Corp.'s corporate family rating to B2 from B1, probability-of-default rating to B3 from B1 and 7¾% senior subordinated notes due 2010 to Caa1 (LGD5, 70%) from B3 (LGD5, 88%).

The outlook is negative. This concludes the review that began on Oct. 15.

The downgrade reflects continued weakness in Salem's national and local advertising revenue due to the current weak economic conditions and a pullback by several advertising categories including automotive and financial services, according to the agency.

The downgrade also reflects the company's covenant compliance cushion that remains extremely thin, the agency said.

Salem's rating reflects its debt-to-EBITDA leverage of 6.7x at Sept. 30 as well as spending and investments related to the company's non-broadcast businesses, the agency noted.

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