Tuesday, July 29, 2008

The Observer-Dispatch Deathwatch

Things aren't looking very bright for Gatehouse Media, the corporate parent of the Utica Observer-Dispatch, Herkimer Telegram, Little Falls Times, and the various area Pennysaver papers. Earlier today their stock fell even further, dropping to a record low of 56 cents. Most of that plunge can be credited to the news from Moody's that the company has a good chance of defaulting on it's loans:

Moody's Investors Service said it downgraded GateHouse Media Operating, Inc.'s corporate family rating to 'Caa1' from 'B2' with a negative outlook citing concerns over near-term liquidity and the likelihood that the company will face a default under its credit agreement, absent an amendment or equity cure.

Moody's (nyse: MCO - news - people ) also said it cut the United States-based publisher's probability of default rating to 'Caa2' from 'B3' and other debt ratings to 'Caa1' from 'B2'.

Several emailers have suggested there may already be some talks underway about the disposition of Gatehouse's local assets. One of the most horrifying scenarios is that a group of investors affiliated with the Arcuri gang may be looking to finally stem the tide of bad press, while another emailer says the Matt family may be part of another buyout effort. Keep in mind that both options were sent to me by anonymous sources, so a little skepticism is probably in order.

As always, you can get the latest stock price from Google Finance.