A report by Moody's Corp. says among the most vulnerable media companies to a recession in the U.S are Clear Channel Communications Inc. (CCU), Gannett Co. (GCI), Belo Corp. (BLC) and the New York Times Co. (NYT). These companies have the best chance of their bond ratings being lowered if a recession happens in the next two years.
The newspaper firms are especially vulnerable because of the migration of advertising to the Internet. Companies with a variety of businesses and smaller debt loads will perform stronger.
"Newspapers have other issues," besides potential economic decline, said Moody analyst Neil Begley. "Their prices are the highest in advertising, so it makes it easy for advertisers to go elsewhere, especially in a recession."
Other media companies that could be downgraded are Dow Jones & Co. (DJ), Cox Enterprises Inc., Hearst-Argyle Television Inc., Walt Disney Co. (DIS), News Corp. (NWS-A), CBS Corp. (CBS-A) and Time Warner Inc. (TWX).
The report added that cable companies aren't nearly exposed to a recession because they rely on subscription sales versus being ad-supported.
Companies covered in the report were only those with investment-grade bond ratings.
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