S&P: WideOpenWest on watch

Standard & Poor’s said it placed the B corporate credit rating on WideOpenWest Finance LLC on CreditWatch with negative implications.

The CreditWatch placement follows the company’s weaker-than-expected operating and financial performance and ongoing free operating cash-flow deficits in 2014 due to aggressive competition in its markets and rising programming expense, which is pressuring the video margin, S&P said.

WideOpenWest sold certain systems in South Dakota for $262 million in a transaction that closed on Sept. 30, 2014, the agency said.

The company has 12 months from the closing date to reinvest the proceeds or repay debt, although it is possible that the transaction may ultimately result in higher leverage, which was about 8x at year-end 2014, S&P said.

Despite the likely elimination of one-time integration-related expenses, the agency said it believes the company will be challenged to maintain leverage at less than 7.5x on a sustained basis given its ongoing free operating cash-flow deficits and increasing competition from incumbent cable providers, satellite TV operators and AT&T’s U-Verse product.

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