Moody's Gives GateHouse Media the Gate--Downgrades Credit Rating

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GateHouse Media Operating, Inc., the Fairport, N.Y.-based media conglomerate's holdings include 90 daily newspapers, 289 weeklies and 115 "shoppers," but Moody's Investors Service is unimpressed.

Characterizing GateHouse's overleveraged capital structure as "unsustainable," Moody's downgraded the company's credit ratings, dropping the "corporate family rating" to Ca from Caa1 and its "probability of default" rating to Ca from Caa2. Citing  GateHouse's $1.2 billion debt, Moody's suggested a pre-packaged bankruptcy filing or a distressed exchange (debt buy-back at way below face value) may be in the offing in 2010.

GateHouse, which is principally owned by the Fortress Investments Group private equity firm, has dropped its dividend and earlier this year was delisted by the New York Stock Exchange.