Charter term loans unmoved by update on contract dispute with Disney

By Sara Rosenberg

New York, Sept. 1 – Charter Communications Inc.’s term loans held steady in the secondary market on Friday after the company updated investors on its contract negotiation dispute with The Walt Disney Co. that resulted in Disney removing its TV channels from Charter Spectrum on Thursday.

Charter’s term loan B-1 and term loan B-2 were quoted at 99 3/8 bid, 99 7/8 offered on Friday, unchanged from Thursday’s closing levels, a trader remarked. The trader went on to say that the B-1 loan was quoted at par bid and the B-2 loan was quoted at 99½ bid earlier in the day on Thursday, but both loans headed down to 99 3/8 bid before the end of the day.

According to Charter, Disney has insisted on unsustainable price hikes and forcing customers to take their products, even when they don’t want or can’t afford them. Charter is also accusing Disney of wanting to require customers to pay twice to get content apps with the linear video they have already paid for.

Charter said in a news release that it would accept Disney’s “market” rates in exchange for lower penetration minimums to deliver package flexibility for customers, inclusion of ad-supported direct-to-consumer apps within packaged linear products so the customer does not have to pay twice for similar programming, and would commit to market Disney’s direct-to-consumer products to broadband-only customers.

Charter added in the release that it offered Disney a shorter-term contract extension, with penetration minimums, but Disney informed the company it is not willing to accept a contract extension.

Charter is a Stamford, Conn.-based broadband connectivity company and cable operator.

Fund flows

In other news, actively managed loan fund flows on Thursday were negative $5 million and loan ETFs were positive $68 million, market sources said.

Loan funds reported weekly inflows totaling $275 million, including positive $313 million ETFs. This was the sixth inflow over the past 53 weeks, and four of them have come in the last nine weeks.

Year to date, outflows for loan funds total $18.8 billion, with negative $490 million ETFs, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Thursday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.06% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.07%.

Month to date, the MiLLi is up 1.17% and year to date it is up 8.86%, and the LLLi is up 0.98% month to date and up 8.41% year to date.

Average secondary market bids in the U.S. on Thursday were 92.73, up 0.04% from the previous day and up 0.94% year to date.

According to the IHS Markit data, some of the top advancers on Thursday were S&S Holdings’ March 2021 covenant-lite term loan at 94.67, up from 93.19, Epic Health’s July 2021 term loan B at 87.25, up from 86.06, and Radiology Partners’ July 2018 covenant-lite term loan at 77.08, up from 76.1.

Some top decliners on Thursday were ScionHealth’s December 2021 covenant-lite term loan B at 30.33, down from 33.67, Gopher Resource’s March 2018 covenant-lite term loan B at 77.08, down from 84.21, and Instant Brands’ April 2021 covenant-lite term loan at 19.5, down from 20.4.

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