Bloomberg has identified Denver-based MediaNews Group as one of the newspaper companies at risk of going into default due to the continued advertising slump. MediaNews owns the Denver Post and approximately 60 other newspapers. According to the article:

Newspapers are selling today for about six times earnings, said Sammy Papert, chairman of Belden Associates, a newspaper consulting firm in Dallas. This is below the 11.5 times earnings that MediaNews and Hearst Corp. paid in a $1 billion deal for the Mercury News and three other newspapers in 2006.

Since then, Denver-based MediaNews, the second-largest closely held U.S. newspaper company by circulation, had its credit rating slashed four levels by S&P to B-, or six levels above default. Debt rated B is likely to become impaired in adverse business, financial or economic conditions, S&P notes.

Singleton expects the company, with average weekday circulation of 2.6 million in fiscal 2007, to remain in compliance with debt covenants, the chief executive officer said in a June 12 telephone interview.

On June 30, if MediaNews has the debt-to-cash flow ratio of 6.53 times it reported on Dec. 31, 2007, it would be in violation of its loans, according to S&P.