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S&P rates Rainbow Media loan BB+
Standard & Poor's said it assigned its BB corporate credit rating to Rainbow Media Holdings LLC and a BB+ bank loan rating to Rainbow's $775 million in amended and restated secured bank loan facilities (based on preliminary information and subject to receipt of the final bank loan documents).
The ratings were simultaneously placed on CreditWatch with negative implications.
Rainbow will have a 100% interest in cable programming channels American Movie Classics Co./Independent Film Channel LLC/WE: Women's Entertainment LLC (AMC/IFC/WE) pro forma for the expected contribution by parent Cablevision of a 20% interest in AMC/IFC/WE to Rainbow, in conjunction with the amended financing and associated $400 million cash contribution to Cablevision. Rainbow also has interests in other content companies.
Borrowings from the bank loan will also be used to fund a portion of Rainbow's capital and operating requirements related to the direct broadcast satellite business, as well as to fund operating requirements of its programming businesses and refinance borrowing under the $75 million in secured credit facilities at AMC/IFC/WE. These entities will become guarantors under the amended facility, which will be secured by the assets and stock in the 100% owned AMC/IFC/WE businesses.
The rating on Cablevision reflects the company's relatively high ongoing level of debt to annualized EBITDA, which totaled about 7.3x as of Sept. 30 (including preferred stock, on an operating lease-adjusted basis), coupled with continued financing requirements and increasing competition from direct broadcast satellite.
However, the company continues to benefit from the attractive demographics of its cable TV franchise area, which currently serves about 2.9 million customers. This base provides good potential for expansion of digital and cable modem services, both of which Cablevision expects to continue to market aggressively.
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