Analysts ponder media industry's next victims

By Georg Szalai

NEW YORK (Hollywood Reporter) - Media giant Tribune recently filed for Chapter 11 bankruptcy protection and Sumner Redstone's National Amusements theater chain violated a debt covenant. The moves beg the question: Who, if anyone, could be next in the broader media and entertainment industry?

The global financial crisis has made debt harder to access and more expensive, leaving Wall Street wondering who might run into trouble -- and even file for bankruptcy -- in 2009.

Besides newspaper companies, Charter Communications, the cable operator controlled by software billionaire Paul Allen, is high on people's lists of concerns.

The St. Louis-based company has long been the most indebted major cable firm, with net debt of slightly more than $21 billion as of September 30, and it has said that it might need to go into bankruptcy to deal with that burden.

President and CEO Neil Smit has focused on boosting revenue and operating cash flow, but to survive under its debt pile Charter has refinanced and extended its maturities every year since 2004.

"Charter is surviving by using debt exchanges to push back maturities," Gimme Credit analyst Shelly Lombard said in a recent report. "Even at the current revenue growth rate, Charter won't be able to grow into its capital structure." She predicts that the company might need to sell "a considerable amount of assets to avoid bankruptcy."

Just before Christmas, Charter said it asked longtime financial advisor Lazard to start talks with bondholders to boost its financial flexibility.

Other ratings agencies also suggested that bankruptcy might be the only way for Charter to work out its debt problems.