An advertising slump and a high debt burden has triggered a downgrade of Canwest Media’s credit ratings by Dominion Bond Rating Service.

DBRS on Friday lowered the credit ratings on a range of debt instruments at Canwest Media, a subsidiary of Canwest Global Communications. Specifically, the credit rating agency downgraded its issuer rating from already speculative BB to B (high) — a highly speculative credit rating that signals uncertainty that an issuer can continue to pay principal and interest on its debt during a recession or industry upheaval.

‘The downgrade of the Issuer Rating reflects ongoing pressure on the company’s underlying business, including the structural challenges impacting conventional television, coupled with cyclical pressures impacting the Canadian advertising market,’ DBRS said Friday. The agency placed Canwest on credit review on Nov. 1.

‘This, when combined with Canwest Media’s high debt levels, has resulted in reduced financial flexibility and liquidity constraints,’ DBRS added, referring to Canwest’s current cash flow problems from falling advertising revenues at its Canadian and Australian conventional TV businesses.

The upshot, DBRS argued, is that Canwest Media could be thrust into negative free cash flow at the end of its fiscal year on Aug. 31, 2009.

DBRS noted that Canwest recently found $47 million in cost savings in the current fiscal year, but added those efficiencies were not sufficient to stave off cash flow problems from the ‘cyclical and structural challenges’ that beset the broadcaster.

Canwest Global earlier this month said it planned to cut 560 jobs and posted a $1.02-billion non-cash quarterly loss to reflect a write-down on the value of its Canadian TV operations.

There’s persistent speculation that, faced with liquidity problems, Canwest Global will eventually have to sell off assets to address rising debt costs.