Moody's affirms Liberty Media

Moody's Investors Service said it affirmed Liberty Media Corp.'s Baa3 senior unsecured credit rating. The outlook remains stable.

Moody's said the affirmation follows Liberty's announcement of plans to distribute its international cable assets, including United Global Communications Inc., Jupiter Telecommunications, Jupiter Programming, and Cablevision of Puerto Rico to shareholders. Combined, these businesses generate about $3 billion of revenue, $900 million of EBITDA, and little-to-no free cash flow due to high upgrade capital expenditures. These businesses carry with them over $4 billion of subsidiary-level debt.

Moody's said the affirmation recognizes the near-term credit benefits to Liberty associated with transfer of the business and financial risk associated with those overseas and developmental businesses. However, longer-term considerations, including potential for material cash flow growth and capital appreciation, offset much of the positive near term credit impact.

Furthermore, the spin-off may delay realization of Liberty's objective of developing and operating a large base of wholly-owned cash-flowing businesses.

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