Wednesday, July 30, 2008

The Observer-Dispatch Deathwatch

The battle for the future of Gatehouse Media continues, but the situation is looking increasingly grim:

GateHouse Media is likely to default under its credit agreement unless it can negotiate an amendment to its covenants or get a cash injection from its largest stakeholder, says Fortress Investment Group, Moody's Investor Service, in a report downgrading the community newspaper publisher's credit and probability of default ratings.

Moody's downgraded GateHouse's Corporate Family rating to Caa1 from B2. Under Moody's definition, the new rating signifies a "substantial risk" of default.

Moody's also downgraded its Probability of Default rating to Caa2 from B3.

"The downgrade reflects Moody's heightened concern that GateHouse could face a near-term default under the financial covenants of its loan agreement, absent an amendment or another equity cure from its largest owner, Fortress Investment Group LLC," Moody's Senior Analyst John Page wrote.

Still not a peep from the Observer-Dispatch, or any of the other Gatehouse-owned papers in the area, about the dire straits of their corporate parent.

Update: Thanks to Peoria Pundit for the link. They're facing much the same situation we are, with the collapse of Gatehouse likely to produce a major shift in the local media landscape.