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Fitch rates News Corp. BBB-
Fitch Ratings said it has initiated coverage of The News Corp. Ltd. and assigned a BBB- senior unsecured debt rating to the company and its wholly-owned subsidiaries, News America Inc. and News Corp. Finance Trust II.
The outlook is positive.
Fitch said the BBB- rating recognizes News Corp.'s prominence as one of the largest diversified global media and entertainment companies with solid market positions in broadcast television, cable network programming, filmed entertainment and newspaper publishing.
Over the past few years, the company has made strides in improving its cash flow generating ability and credit protection metrics, benefiting from sustained audience share improvement at its cable networks, including Fox News, FX, and Fox Sports; market share gains and enhanced cash flow efficiencies at its television stations; and favorable performance in the filmed entertainment segment.
In addition, the company's associated entities have begun to post positive operating income, with notable growth from News Corp.'s 35% equity investment, British Sky Broadcasting Group plc, currently rated BBB-/stable by Fitch.
Fitch said credit concerns include the company's dependence on cyclical advertising revenues, variability inherent in the company's filmed entertainment and TV programming production business segment, the cash funding requirements and higher credit risk profile of the company's more developing businesses such as Sky Italia as well as the company's appetite for acquisitions.
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