Moody’s might up 21st Century Fox

Moody's Investors Service said it placed 21st Century Fox America, Inc.'s (FOX) Baa1 long-term senior unsecured debt ratings on review for upgrade following the announcement by Walt Disney Co. (A2, Prime-1) that it agreed to acquire various assets from FOX for about $66 billion, including the assumption of all of FOX's debt.

The assets Disney will acquire include FOX's general entertainment cable networks, film studio, TV studio, international assets including its stake in Sky plc (Baa2) and its U.S. regional sports networks.

The acquisition equity will be an all-stock transaction and is expected to close within the next 12 to 18 months.

“FOX is expected to spin off the assets not being acquired by Disney, including its Fox Broadcast network and owned and operated stations, and its national cable news and sports networks,” Moody’s said in a news release.

“Disney's agreed upon purchase price represents an approximately 8.7 synergy-adjusted EV/FY 2018 EBTIDA multiple for the acquired assets based upon Disney's closing share price yesterday. Disney will also assume the $6.3 billion of cash currently on FOX's balance sheet and the acquired assets' earnings during the interim period prior to close.”

The review reflects the benefit of merging with the higher-rated, larger Disney entity, with strong support from the future parent, Disney, the agency explained.

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