S&P shifts Mediaocean view to negative

S&P said it revised its outlook for OceanKey (U.S.) II Corp. (Mediaocean) to negative from stable and affirmed its ratings, including the B senior secured debt rating.

“Our negative outlook reflects the company's negative year-to-date cash flows from operations and the risk that rising interest rates and additional challenges in its advertising end-markets may increase the risk that cash flows remain weaker than expected, specifically below our 5% FOCF to debt downgrade trigger. We believe cash flows sustained below this level increase the risk the company may need to rely on its revolver and cash balances instead of internally generated cash to periodically service its debt amortization; therefore, reducing its credit quality relative to B rated peers,” the agency said in a press release.

Additionally, S&P noted Mediaocean’s recent acquisitions delivered less-than-expected results, citing volatile advertising demand and specific difficulties in these digital end markets.

High-interest expenses and a challenged advertising market could hurt cash flow such that Mediaocean’s free operating cash flow (FOCF) to debt remains below 5% through 2023, the agency said.

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