McClatchy Gains on S&P's Upgrade

McClatchy is up more than 8% today after Standard & Poor's raised its corporate credit rating on the newspaper publisher.
By Theresa McCabe ,

NEW YORK (

TheStreet

) --

McClatchy

(MNI) - Get Report

shares were gaining nearly 8% in Thursday afternoon trading after

Standard & Poor's

raised its corporate credit rating on the newspaper publisher to B from B-.

In a research note, S&P Credit analyst Hal Diamond wrote that improving ad sales trends will result in a "recovery" in McClatchy's full-year 2010 earnings before interest, taxes, depreciation, and amortization.

To be sure, the print advertising business remains in decline. But the severe, years-long ad recession appears to be moderating. Diamond said McClatchy's total revenue could decline at a single-digit percentage rate in 2011. In 2009, the company's revenue fell by about 23% year-over-year. In the third quarter, the decline was 5.7%.

A recovering advertising market in general will help McClatchy improve its debt leverage, S&P said.

S&P added that its business risk profile for McClatchy remains "weak," reflecting its reliance on print ad revenue.

Thursday afternoon, the stock was up 7.8% to around $5. More than 1.9 million shares had changed hands, compared with daily average volume of around 986,000.

-- Written by Theresa McCabe in Boston.

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