NEW YORK — Several media conglomerates took a drubbing in the stock market on Friday, led by a bruised Vivendi Universal, which sank to a new low after debt-rating agency Moody’s cut its rating on the French behemoth to one level above “junk” status.
Viv U shares sank more than 5% to $29.07 following the downgrade of its long-term senior debt to Baa3 from Baa2. Moody’s expressed concerns over the company’s ability to trim its $18 billion debt and meet its own ambitious targets for revenue and cash flow growth.
On the plus side, Moody’s changed its outlook for Vivendi’s debt performance from “negative” to “stable,” offering some encouragement that the worst may be behind them.
Conglom’s stock has been in free-fall over the past several months, dropping nearly 50% since the beginning of the year, amid investors’ ongoing concerns about the company’s debt loads and amorphous business strategy.
Vivendi decried the downgrade in a statement Friday, reiterating that the company will be able to reach its goals as stated.
“Vivendi Universal affirms that it has every confidence in its ability to meet its operating targets for 2002, as proved by its first-quarter results,” the conglom said. “The company is totally determined to carry through its debt reduction program in order to make a rapid return to a comfortable position with a Baa2 rating.”
Vivendi wasn’t the only media giant to take it on the chin in Friday’s markets. The equally beleaguered AOL Time Warner sank 3.2% to $18.05, capping months of steady declines. Investors have been eyeing the company’s plans for content-distribution synergies with increasing suspicion, as growth at the flagship America Online Internet-access service sags and broadband initiatives fail to bear fruit.
Even better-performing media stocks like Disney weren’t immune to Friday’s downturn: the Mouse House slipped by 1.8% to end the week at $23.60. Disney has fared relatively well so far this year — edging higher since January while peers declined — but the stock took a hit earlier this week on news that ABC Television topper Steve Bornstein had ankled his post.
The distribution end of the media spectrum also took its lumps this week. Satcaster EchoStar sank 5.4% Friday, on top of a 5% loss the day before, after first-quarter results and predictions for the coming year fell short of investors’ expectations.
Meanwhile, battered cable-system operator Adelphia edged marginally higher Friday following a 13% loss the day before, when the company said it would have to restate its financial results for the last three years. Adelphia has been plagued with questions over its accounting methods and its prodigious debt levels for weeks, driving its stock down 70% over the past month.