S&P: PanAmSat, DirecTV unaffected

Standard & Poor's said Thursday that The DirecTV Group Inc.'s (BB/Watch positive/--) agreement to sell its 80.5% interest in PanAmSat Corp. (BB/Watch developing/--) to affiliates of Kohlberg Kravis Roberts & Co. will not immediately affect the ratings on either company.

S&P said the ratings on DirecTV remain on CreditWatch with positive implications, reflecting operating improvement expected under News Corp. control. Proceeds from the PanAmSat divestiture and rising operating cash flow from the U.S. satellite TV operations will put DirecTV in a good position to boost spending on additional satellite capacity and subsidies for advanced set-top boxes, which should bolster competitiveness against EchoStar Communications Corp. and cable operators.

The ratings on PanAmSat remain on CreditWatch with developing implications based on uncertainty about the company's financial profile and strategic plans under KKR ownership, S&P noted. Ratings will be resolved following reviews of the respective companies' business and financial plans.

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