Fitch Ratings has today changed the Outlook on Turkish newspaper Hurriyet’s Senior Unsecured Local Currency Rating to Positive from Stable, to reflect improved advertising revenue prospects on the back of a pick-up in the Turkish economy.
At the same time, Fitch has affirmed Hurriyet's Senior Unsecured Foreign and Local Currency Ratings at B and B+, respectively. It has also affirmed the company's National Rating at A+. The affirmation and Outlook change follow the completion of the agency's rating review assessment.
The review confirms Hurriyet's credit metrics are consistent with the current rating categories. Hurriyet's strong market position and brand name position it well to benefit from the rebound in the ad market.
While competition in the Turkish newspaper industry is getting intense with the entry of new players, Fitch believes this will have limited impact on Hurriyet's operations in the near- to medium-term, thanks to the company's entrenched brand name and market position.
Fitch views that Hurriyet's 10 percent annual ad revenues rise is achievable in FY03. Improved advertising trends and management's prudent financial policy have yielded moderate adjusted consolidated 0.4x net leverage in the first half of 2003, which includes the debt in its 55 percent-owned Dogan Ofset and Hurriyet's wholly-owned Germany operations, compared to 0.5x in FY02.
Despite Hurriyet's conservative financial policy, Fitch notes that Hurriyet provides financial guarantees for its parent Dogan Media Group's ("DMG") loans, which the agency has factored into the ratings accordingly. Hurriyet's leverage including these commitments remains consistent with the ratings.
DMG recently declared that its listed group companies including Hurriyet will start distributing cash dividends, although details are not known yet. Fitch will monitor the extent of dividend payments and report the related implications on Hurriyet's ratings.
Hurriyet is Turkey's leading daily national newspaper, with leading positions in advertising and circulation revenues. It is a majority-owned by DMG, which in turn is controlled by Dogan Holding, and ultimately the Dogan family. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
