Another downgrade by a major ratings agency slapped shares of Vivendi Universal lower Monday, prompting more glum trading for showbiz stocks even as Sony’s “Spider-Man” burns up the box office.
Viv U fell 2.65% to $28.50 after Standard & Poor’s lowered its rating on the company’s short-term debt to one notch above junk-bond status. The firm said Vivendi’s ailing stock price may make it hard for the conglom to clean up its balance sheet and eventually could force repayment of billions of dollars of debt.
Investors also hit News Corp. ahead of next week’s quarterly earnings report, when Rupert Murdoch’s company is expected to post a hefty one-time charge. News Corp. shares fell nearly 3% to $25.69, their lowest level in years.
AOL Time Warner dropped 4.38% to $17.26. The company revealed in an SEC filing that AT&T will exercise an option to boost its holding in Time Warner Entertainment by 2.6%, raising its stake to 27.6%.
AOL TW, which owns the rest of TWE and has management control, is in talks with merger partners AT&T and Comcast to unravel the venture. which houses Warner Bros., HBO and cable systems.
Walt Disney fell 2.88% to $22.92. Viacom was off 1.78% to $46.42.
“Spider-Man” spun a safety web for Sony, whose shares were nearly unchanged, easing 0.04%, to $54. Sony Pictures is only a small piece of the electronics giant.
Media stocks reflected a sour mood in the market as the Dow Jones Industrial Average plunged nearly 200 points (1.98%) to close at 9,808. Investors seemed in doubt about the strength of an economy recovery and corporate earnings in a range of industries and on both sides of the Atlantic.
Vivendi is catching a daily barrage of negative press — from huge charges to botched voting at the annual shareholders’ meeting to its eroding credit rating.
The S&P downgrade followed a similar move Friday by rival Moody’s Investor Services. Both firms worry that Viv U’s falling stock price could force it to refinance debt and trigger put options.
But S&P said Vivendi’s outlook could brighten this year and next if its various businesses continue to generate cash. It noted the company has funds available to back up its existing commercial paper.