S&P: No change to Discovery

Standard & Poor's said its ratings on Discovery Communications Inc. are unchanged after the company's recent announcements.

Discovery said it would purchase SBS Group's television and radio operations in Sweden, Norway, Denmark, Finland and England for €1.33 billion. It is also in negotiations with TF1 over a strategic alliance including the purchase of a 20% interest in Eurosport for €170 million.

The agency said it regards the two transactions as potentially risky. While they expand Discovery's international assets, helping it develop its international expertise, the transactions also expose Discovery to content with higher risk and lower margins, specifically scripted programming and sports.

Additionally, the transactions would modestly increase the revenue and EBITDA contribution from advertising, which S&P expects to result in somewhat more cyclical operating performance.

The agency said it estimates pro forma debt to last-12-months' EBITDA could rise to about 3.3x if Discovery fully funds these transactions with debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.