As the economic recovery progresses, credit fundamentals in the media
sector continue to improve gradually. For full-year 2005, we expect
overall U.S. advertising spending to grow 5.4%, a slower rate than
2004’s 7.5% increase. Based on our analysis of the media space, we offer
the following sector weightings:
-- Radio Broadcasting ---Overweight
-- TV Broadcasting --- Marketweight
-- Outdoor Advertising --- Underweight
-- Motion Picture Theaters --- Marketweight
-- Publishing/Printing/Business Services --- Underweight
-- Entertainment -- Marketweight
• The potential risks for investors in media, in our view, focus on 1) the
rate of economic growth, 2) potential changes in balance sheets, 3)
technology shifts, and 4) the regulatory environment. Furthermore,
while we understand investors are reluctant to “chase” yield, we do believe
several potential total return opportunities exist among media credits,
primarily:
-- Granite Broadcasting
-- Houghton Mifflin
-- Paxson Communications
-- Vertis, Inc.
-- Warner Music Group

High Yield Media Update: Introduction
In this special edition of our “High Yield Media Update” we are presenting our 2005
outlook for the high yield media sector.
In this edition, we are including the following features:
• Full-year 2004 and 2005 earnings estimates for 35 media (broadcasting,
publishing and entertainment) credits
• Top total return picks
• Outlook for major media sectors and specific credit recommendations
• Capital structure comparables
• Recent credit updates
• One-page financial profiles for over 40 media (broadcasting, publishing and
entertainment) credits
• “At a Glance” relative value pricing sheets