Wachovia cut Clear Channel Communications (CCU), Radio One (ROIAK), and Cox Radio (CXR) to buy from strong buy. The brokerage also downgraded Emmis Communications (EMMS) and Saga Communications (SGA) to hold from buy.
Analyst James Boyle says the economic news has worsened. Consumer spending seems stretched, and advertising is not robust. He sees no near term catalysts. He believes debt leverage may become more burdensome and competitive position may become tougher.
He says it is possible that general and/or specific corporate governance concerns might crop up directly or indirectly affecting individual companies. For a turn around, major radio groups will have to ramp up growth to generate substantial GAAP FCF, while at same time, the economy bounces back.