Moody's might upgrade Sinclair

Moody's Investors Service said it placed the ratings of Sinclair Broadcast Group, Inc. and Sinclair Television Group, Inc. on review for possible upgrade, including Sinclair Broadcast's Caa2 corporate family rating, Caa3 probability-of-default rating and Caa2 (LGD4, 59%) 4.875% senior subordinated notes and Sinclair TV's B1 (LGD1, 5%) senior secured bank credit facility and Caa3 (LGD3, 31% - changed from 32%) 8% senior subordinated notes.

The review follows Sinclair's announcement that Sinclair TV has begun a tender offer for Sinclair's 3% and 4.875% convertible senior notes putable in May 2010 and January 2011, respectively, and entered into a non-binding memorandum of understanding with Cunningham Broadcasting Corp. to amend the terms of their local marketing agreement.

Moody's said the review supersedes the review for possible downgrade begun on July 13 and reflects its increased level of confidence that a better projected revenue environment and improved credit market conditions will allow Sinclair to access markets at sufficiently economic terms to address its near-term liquidity needs and sustain the existing capital structure.

In the review, the agency will consider Sinclair's ability to place a sufficient amount of second-lien notes to fund the tender of the convertibles and close the amendment to the local marketing agreement and will evaluate Sinclair's plans to fund any convertibles that are not tendered and its material subsequent maturities through September 2012.

The debt-to-EBITDA ratio was approximately 6.9 times for the last 12 months ended June 30.

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