Moody’s Investors Service has placed CBS and Viacom debt ratings up for review, adding that it will likely downgrade the broadcaster’s overall credit rating while boosting that of Viacom’s.
Broadcast TV outlets have been bracing for a difficult year in advertising, with ad revenues expected to fall by 6% to 9% compared to last year, according to a forecast by Moody’s Investor Service. Growth in national advertising has stalled as marketers shift their dollars to digital outlets and cable TV channels. Local advertising, the key driver for television stations, should offset the weakness in national advertising, according to Moody’s report released early Wednesday. However, the two-year outlook is particularly sunny.
The Weather Channel faces “severe operational and credit ramifications” if it can’t reach a deal with DirecTV to bring it back to the satellite company’s 20 million subscribers, according to Moody’s Investors Service.
The leverage being carried by television station owner Bonten Media Group is higher than Moody’s Investor Service likes, and its lack of scale increases its vulnerability to any kind of serious reversal, but that said, the leverage is shrinking and the company’s latest Moody’s report card is good.
Exclusives
Japan’s Sony and Panasonic both had their debt ratings downgraded on Friday by Moody’s Investors Service, which cited concerns about continued losses in their TV divisions, two weeks ahead of their earnings announcements.
Reverse Comp To Hurt Stations’ Cash Flow
Station groups including Belo, Gray Television, LIN Media, NexStar Broadcasting, and Sinclair Broadcast face a big problem after next year’s elections when the cash from political ads evaporates: Their revenues and cash flow could plummet as they’re forced to turn as much as half of the money they collect from cable and satellite retransmission consent agreements over to ABC, CBS, Fox and NBC, according to a report today from Moody’s Investors Service.
Barrington Broadcasting has a 24-TV station group (owned or operated) that is diverse both geographically and in terms of network affiliation. Moody’s Investor Service says that as long as Barrington pursues certain financial strategies, it warrants an upgrade to its corporate family rating and its probability of default rating.
Moody’s Investors Service changed its ratings outlook for Local TV Finance LLC’s to “positive” from “stable” and affirmed the company’s existing ratings including its Caa1 Corporate Family Rating (CFR) and Probability of Default Rating as well as its debt instrument ratings. Local TV has approximately $525 million of rated debt.
