S&P cuts Belo

Standard & Poor's said it lowered the corporate credit rating on Belo Corp. to B+ from BB- and its senior unsecured debt to B from B+ with 5 recovery rating.

The outlook is stable.

"The downgrade reflects our expectation that Belo's operating performance will remain weak over the intermediate term," S&P analyst Deborah Kinzer said in statement.

"In addition, we are concerned that the company will need to amend the financial covenants in its credit agreement to avoid a covenant violation as early as the fourth quarter of 2009."

The B+ rating reflects Belo's high financial leverage from the retention of all outstanding debt after the February 2008 spinoff of its newspaper business, the vulnerability of TV broadcasting's revenues to economic cycles, earnings volatility between election and nonelection years and competition from alternative media, the agency said.

The company's strong station portfolio and diversification among network affiliations minimally offset these factors, the agency said.

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