NEW YORK—In a new report explaining its decision to downgrade debt ratings for several broadcast groups in 2024, S&P Global Ratings predicts modest declines in retransmission consent and core advertising revenue for TV stations in upcoming years. That ongoing trend is likely to make stations increasingly reliant on political advertising and could make it more costly for groups to refinance their debts, per the credit agency.
“We believe the industry will become increasingly reliant on political advertising revenue in even years,” Rose Oberman, Media & Entertainment director, S&P Global Ratings, wrote in the report. “At the same time, many local TV broadcasters face refinancing upcoming debt maturities at higher interest rates in 2026 and beyond. As a result, we expect EBITDA will gradually decline and cash flow will weaken.”
The report also noted that S&P Global Ratings so far this year had downgraded some debt from several broadcasters, including Cox Media Group, Gray Media, Sinclair and E.W. Scripps.
“Of the six local TV broadcasters we rate, two have stable outlooks (Nexstar and Tegna) reflecting stronger leverage and cash flow profiles, which we believe will support debt reduction and refinancing efforts,” Oberman noted. “The remaining four have negative outlooks (Sinclair, Gray, E.W. Scripps, and CMG). These companies currently have elevated leverage and could potentially face refinancing risk if they do not use their excess cash balance and expected free operating cash flow (FOCF) toward debt repayment.”
Oberman also argued that “the industry's concentration of debt maturities beginning in 2026 increases refinancing risk given the potential for waning lender demand leading to a shortfall in willing lenders to the sector.”
Oberman stressed, though, “we don't currently envision making additional material revisions to our estimated company enterprise values” unless retransmission fees and core ad revenues decline at a faster-than-projected rate.
