Fisher Communications gets an upgrade from Moody's


Moody’s Investors Service recently completed a review of its credit ratings for Fisher Communications and the outcome was good news for the company – a ratings upgrade.

Moody’s upgraded Fisher Communication Inc.’s Corporate Family Rating (CFR) to B1 from B2 and Probability of Default Rating (PDR) to B1 from B2. Moody’s also upgraded the company’s Senior Unsecured Notes due 2014 to B1 from B2

“The upgrade is due to the company’s success in improving EBITDA margins combined with meaningful debt reduction leading to expected good free cash flow generation over the rating horizon,” said the Moody’s report.

“Fisher’s B1 Corporate Family Rating reflects our expectation that management will achieve targets we established for an upgrade including the reduction in absolute debt balances to approximately $50 million and increasing EBITDA margins to greater than 25%. Improved margins combined with meaningful debt reduction resulted in 2.1x debt-to-EBITDA ratios estimated for LTM June 30, 2011 (including Moody’s standard adjustments) compared to 7.3x for the same period in the prior year,” the ratings agency said.

“Since 2009 management has been repurchasing senior notes consistent with its strategy to reduce debt. Over the same period, consolidated EBITDA margins have improved to more than 20% for LTM June 2011 (including Moody’s standard adjustments) compared to 7.5% for FY2009 reflecting management’s focus on personnel costs as well as benefits from shared services and automation. Having entered into an agreement to divest remaining small market radio stations, we expect EBITDA margins to improve further; however, overall margins will continue to be constrained by Fisher’s lack of national scale and fewer broadcast properties over which operators allocate fixed costs including corporate overhead,” Moody’s observed.

The analysis noted that Fisher continues to explore strategic alternatives for Fisher Plaza, including a sale or mortgaging of the asset. Moody’s said a recent appraisal valued the facility at $142 million, 34% above the $106 million book value as of December 2010. Moody’s also noted the recent deal to sell six small market radio stations in Montana for $1.8 million.

Moody’s did not fail to take note of the recent proxy fight, but did no more than take note of it: “Leading up to the annual shareholders meeting in May 2011, FrontFour Capital (representing dissident shareholders) sought to gain a majority of board representation, but was able to win only two seats, bringing its total to three of the total nine board seats, leaving six directors who are supportive of existing management’s growth strategy. Costs related to the proxy contest were reported to be $1.6 million in the first half of 2011.”

Looking ahead, “The stable outlook reflects our expectation that debt-to-EBITDA ratios (including Moody’s standard adjustments) will remain below 4.25x and that Fisher will maintain good liquidity. The outlook incorporates the potential for dividends and share repurchases funded by excess cash or a portion of free cash flow,” Moody’s said.


..Issuer: Fisher Communications, Inc.

.Corporate Family Rating: Upgraded to B1 from B2

.Probability of Default Rating: Upgraded to B1 from B2

. Senior Unsecured Notes due 2014: Upgraded to B1, LGD 4 — 52% from B2, LGD 4 — 51%


..Issuer: Fisher Communications, Inc.

….Speculative Grade Liquidity Rating: Affirmed SGL-2

Outlook Action:

..Issuer: Fisher Communications, Inc.

….Outlook is stable