NEW YORK: CBS Corp. has been put on downgrade watch by Standard & Poor’s. The service put its long-term and corporate ratings for CBS (NYSE: CBS) on CreditWatch, “with negative implications.” A downgrade would place CBS at BBB-, one level above junk status. S&P lowered the media company’s short-term rating and put it on CreditWatch in February.
“The CreditWatch listing of the long-term ratings reflects our expectation that fully adjusted leverage will rise meaningfully above our 4x threshold at the current rating level in 2009,” S&P analyst Michael Altberg said. “Our concern is most focused on local advertising weakness that has compounded adverse secular trends that have affected radio, TV, and outdoor advertising in various degrees.”
Altberg said S&P’s analysis uses data through early March encompassing unemployment, consumer confidence, weak auto sales and an expectation that gross domestic product will decline this year. Forbes.com lists CBS current leverage ratio--assets divided by stockholder equity--at 3:1. Its total debt is listed as 81 percent of total equities.
“Based on our macroeconomic concerns, we are now less confident that the company will bring leverage back below our 4x threshold in 2010,” he said.
S&P analysts will meet with CBS management and review its 1Q results with particular attention to upfront ad sales and its strategy for debt due in 2010. Shares of CBS fell to a 52-week low in March of just above $3. The stock is now trading at around $4.80. -- Deborah D. McAdams
CATEGORIES
LATEST ARTICLES