Moody's affirms Disney

Moody's Investors Service said it affirmed the Walt Disney Co.'s A2 senior unsecured rating following the company's announcement that it will acquire Marvel Entertainment, Inc. for about $4 billion.

Moody's noted that it continues to believe that Disney is very weakly positioned in the A2 rating category and believes that management's willingness to continue spending on acquisitions and investments in the face of the weak economy and uncertain near-term outlook is inconsistent with the more conservative actions of its peers.

However, the affirmation reflects Moody's belief that despite continuing cyclically weak operating performance and the increase in debt leverage associated with the acquisition, the strategic benefit of the acquisition and Disney's ability to continue generating strong free cash flow provides it the ability to reduce debt and improve credit metrics to levels commensurate with the company's A2 credit rating within two years, particularly as economic pressures subside, the agency said.

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