Media and entertainment companies had the greatest number of “ratings actions” (bond-rating speak for upgrades and downgrades of credit ratings) in the third quarter, according to Standard & Poor’s Global Fixed Income Research.Most of the action was on the downside. Worldwide, S&P lowered the credit ratings of 29 media and entertainment companies while raising the ratings of three. Since 52% of the world’s rated debt-issuers are in the U.S., it follows that most of the ratings actions in media and entertainment affected domestic companies. But the U.S. accounted for almost 76% of the downgrades (and all of the upgrades). One of the upgrades, from B to B+, was Albritton Communications, owner of seven ABC affils. Meanwhile, biz mainstay Deluxe Entertainment Services Group fell from B to B- at the end of July. Bonds issued by both of these companies remain below the BBB that marks the start of the investment grade category. One media company had both an upgrade and a downgrade in the past quarter. A firm called Local TV was founded in 2006 to buy nine TV stations previously owned by the New York Times Co. Today, Local owns or operates 21 stations. In August, S&P upgraded its bond rating from B to B+. A month later, the rating returned to B after Local added $70 million to its debt load to pay a dividend. An S&P forward-looking metric included banks and transportation among its projected weakest sectors in a difficult global economy; media was not on the list. So, by that yardstick, media bonds should not experience as many downgrades in the future.
Data provided by:Nielsen Media Research (Preliminary Results)