Moody's turns positive on Belo


Moody’s Investors Service wasn’t concerned in the least that Belo Corporation had resumed paying a cash dividend to shareholders. It’s looked at the company’s cash flow generation and changed its credit rating outlook on Belo to “positive.”

Moody’s said the dividend move was expected, since Belo had called its dividend halt in 2009 a suspension, rather than a termination. Now the economy is on the mend, Belo’s TV ad revenues are rising and it has been paying down debt.

“Moody’s believes Belo will continue to generate meaningful free cash flow despite the re-introduction of a $0.05 quarterly dividend. Moody’s expects Belo will balance the use of cash flow for a combination of shareholder distributions, moderately sized acquisitions and debt repayment (including the pension plan). Belo’s debt-to-EBITDA (approximately 4.1x LTM 3/31/11 incorporating Moody’s standard adjustments and the approximate reduction in the pension liability related to the split of the plan between Belo and A.H. Belo on January 1, 2011) is currently within the 4.5x level that the company would need to maintain leverage below for an upgrade,” the ratings agency said.

Belo has approximately $900 million of debt rated by Moody’s. Belo’s Corporate Family Rating (CFR) by Moody’s is Ba3, so an upgrade to Ba2 would put it just two steps from an investment grade rating.