Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Fitch Affirms Comcast's IDR at 'BBB+' and NBCUniversal's IDR at 'BBB'; Outlook Stable



  Fitch Affirms Comcast's IDR at 'BBB+' and NBCUniversal's IDR at 'BBB';
  Outlook Stable

Business Wire

CHICAGO -- November 08, 2012

Fitch Ratings has affirmed the 'BBB+' Issuer Default Ratings (IDRs) assigned
to Comcast Corporation (Comcast) and its wholly owned subsidiaries included in
Comcast's cross-guaranty structure that hold all of the company's cable
businesses. Fitch has also affirmed the 'BBB' IDR assigned to NBCUniversal
Media, LLC (NBCUniversal), a direct wholly owned subsidiary of NBCUniversal,
LLC. NBCUniversal, LLC is a joint venture between Comcast and General Electric
Company (GE). Comcast manages and owns 51% of NBCUniversal, LLC. In addition
Fitch has affirmed specific issue ratings assigned to Comcast and its
subsidiaries as outlined below. The Rating Outlook for all of Comcast's
ratings is Stable. Approximately $38.6 billion of debt, including $9.7 billion
outstanding at NBCUniversal as of Sept. 30, 2012 is affected.

Fitch believes Comcast's strong operating profile and solid free cash flow
metrics afford the company a high degree of financial flexibility at the
current rating category. The company generated approximately $8.3 billion of
consolidated free cash flow (defined as cash provided by operating activities
less capital expenditures and dividends) during the LTM period ended Sept. 30,
2012. Fitch anticipates that the company will consistently generate
consolidated free cash flow in excess of $7 billion annually after considering
higher cash taxes due to the absence of further economic stimulus legislation.

Fitch does not expect any material change to Comcast's capital allocation
strategy over the near term. The company maintains an appropriate balance
between returning capital to shareholders, in the form of dividends and share
repurchases, repaying debt, and investing in the strategic needs of its
business. Cash generated from the cable business will be used to return cash
to Comcast shareholders while cash generated at NBCUniversal will build-up in
anticipation of obligations related to GE's ownership put rights. Cash
returned to shareholders (dividends plus buybacks) totaled $3.4 billion or
approximately 48% of cash flow before dividends during the first nine months
of 2012. As of Sept. 30, 2012 approximately $4.25 billion of capacity remains
under Comcast's share repurchase authorization.

Comcast's leverage declined to 1.94x on a consolidated basis as of the LTM
period ended Sept. 30, 2012 when compared to 2.11x as of year-end 2011 and
2.35x for the LTM period ended Sept. 30, 2011. The company is operating at the
lower end of Comcast's leverage target ranging between 2x and 2.5x.
NBCUniversal's leverage was 2.4x (2.9x pro forma for NBCUniversal's $2.0
billion issuance of senior notes during October 2012). Both leverage metrics
are within Fitch's expectations given the current ratings. After considering
NBCUniversal's recent debt issuance, Fitch expects consolidated debt levels
will remain relatively constant during 2013. On a consolidated basis, Fitch
anticipates Comcast's leverage metric will remain at the lower end of the
company's leverage target and approach 1.9x as of year-end 2013, while
NBCUniversal's leverage metric will range between 2.5x and 2.75x by year-end
2013.

Fitch's ratings incorporate Comcast's strong competitive position as one of
the largest video, high speed internet and phone providers to residential and
business customers in the United States and the company's compelling
subscriber clustering profile with operations in 39 states and the District of
Columbia. In Fitch's view NBCUniversal's size, scale, leading brand positions
and diversity of operations and business risk as one of the world's leading
media and entertainment companies, lowers the business risk attributable to
Comcast's credit profile and creates new avenues for revenue and cash flow
growth while limiting the near-term impact on Comcast's balance sheet and
credit profile.

Fitch believes Comcast's competitive position of its cable business will
remain strong during the current ratings horizon. Fitch does not expect the
competitive pressure associated with the service overlap of the different
telecommunications service providers to materially change. Comcast's
residential cable operating profile strengthened during the course of 2012
notwithstanding the competitive pressure, and weak employment and housing
market conditions. Comcast continues to make appropriate investment in
technology and other strategic product initiatives to improve competitive
position and change the way consumers utilize video, voice, and
high-speed-data services. These investments have contributed to a reduction of
video service subscriber losses during the year and the solidification of the
company's high-speed data market share lead.

Demonstrating the operating leverage inherent in the cable business, Comcast
has maintained its cable EBITDA margins while experiencing consistent video
service gross margin pressure brought on by persistent programming cost
increases. Comcast offsets higher operating expenses by realizing operating
efficiencies and improving its revenue mix to higher margin services
(high-speed data and commercial services) and improving penetration of
advanced video services.

NBCUniversal's portfolio of leading cable networks is a key consideration
supporting Fitch's ratings and a key strength of the company's credit profile.
Fitch considers cable networks one of the strongest subsectors in the media
and entertainment industry, providing NBCUniversal with a revenue base largely
consisting of stable, recurring and high margin affiliate fee revenue
generated from multichannel video programming distributors as well as a
significant source of NBCUniversal's free cash flow generation. Fitch
acknowledges that increasing programming expense will weigh on cable network
operating margins.

NBCUniversal's 'BBB' IDR reflects its stand alone credit profile while
incorporating the company's strong strategic tie with Comcast. NBCUniversal's
debt is not guaranteed by either Comcast or GE, and Comcast's debt does not
contain cross default provisions. NBCUniversal's ratings are enhanced by a key
corporate governance provision between Comcast and GE limiting NBCUniversal
from incurring additional indebtedness if the company's leverage is greater
than 2.75x.

Outside of a change to Comcast's financial strategy or event driven merger and
acquisition activity, rating concerns center on Comcast's ability to adapt to
the evolving operating environment while maintaining its relative competitive
position given the challenging competitive environment and weak housing and
employment trends. Considering the mature nature of video services and growing
penetration of high speed data services, Comcast's ability to grow consumer
revenues while maintaining operating margins remains a key rating
consideration.

Within NBCUniversal, rating concerns center on the secular issues challenging
NBCUniversal's Broadcast Television segment, including time-shifting
technologies and internet based content, as well as the cyclicality of
advertising revenues. Fitch believes that on a total company basis
NBCUniversal generates less than half of its revenues from advertising - in
line with its media peer group. The operating margins generated by
NBCUniversal's Broadcast Television segment lag its peer group. The company
believes that improved programming and scheduling can improve operating
margins. However there is sufficient capacity within NBCUniversal's current
ratings to accommodate the 'hit natured' fluctuation of the Filmed
Entertainment segment operating profile.

Comcast's liquidity position and overall financial flexibility are strong
owing to Fitch's expectation that the company will continue to generate
material amounts of free cash flow. Fitch acknowledges that Comcast's share
repurchase program represents a significant use of cash; however, Fitch
believes that the company would reduce the level of share repurchases should
the operating environment materially change in order to maximize financial
flexibility. The liquidity position if further supported by cash on hand
(which totaled $8.9 billion on a consolidated basis as of Sept. 30, 2012) and
available borrowing capacity from Comcast's $6.25 billion revolver (of which
approximately $5.8 billion was available for borrowing). Comcast's revolver
will expire during June, 2017.

Comcast's cash balance is high relative to historical norms and reflects $3
billion of cash proceeds received from the sale of NBCUniversal's 15.8%
economic stake in A&E Television Networks, LLC as well as $2.3 billion of cash
received by Comcast in connection with the company's share of cash proceeds
generated from SpectrumCo's sale of its advance wireless services spectrum to
Verizon Wireless.

NBCUniversal held approximately $4.2 billion of cash as of Sept. 30, 2012,
which supports the company's strong liquidity position. The company's high
conversion of EBITDA into free cash flow is a key liquidity consideration
supporting the 'F2' rating. NBCUniversal's $1.5 billion senior unsecured
revolving credit facility provides a 100% liquidity back-up to its CP program.
Commitments under the revolver expire during June 2016, and as of Sept. 30,
2012 approximately $1.4 billion was available for borrowing.

While earlier than anticipated, Fitch believes the company is beginning to
accumulate cash to fund an anticipated future redemption of GE's interest in
NBCUniversal, LLC. Under the terms of the joint venture operating agreement,
GE has the right to cause NBCUniversal, LLC to redeem for cash one-half of its
remaining 49% non-controlling equity interest during a six-month period
beginning July 28, 2014. GE's then remaining stake in NBCUniversal, LLC can be
redeemed during a six-month period starting Jan. 28, 2018.

Comcast's debt maturity profile on a consolidated basis is well laddered and
within Fitch's FCF expectation for the company. Scheduled maturities during
2013 total approximately $2.4 billion followed by $2 billion during 2014
including $907 million at NBCUniversal.

What Could Trigger a Positive Rating Action:

--Positive rating action would likely coincide with Comcast committing to
reduce leverage below 2x on a sustained basis after considering Comcast's
potential funding obligations related to GE's ownership put rights related to
NBCUniversal.

--Comcast would need to demonstrate that its operating profile will not
materially decline in the face of competition and poor housing and employment
conditions.

--While Fitch expects improving operating trends will strengthen
NBCUniversal's credit profile, positive rating actions are unlikely given the
company's obligations related to GE's ownership put rights.

--Strengthening of the implicit linkage of NBCUniversal's ratings to Comcast
Corporation as evidenced by Comcast increasing its ownership stake in
NBCUniversal and NBCUniversal's growing strategic importance to Comcast.

What Could Trigger a Negative Rating Action:

--Negative rating actions are more likely to coincide with discretional
actions of Comcast's management including, but not limited to the company
adopting a more aggressive financial strategy or an event driven merger and
acquisition activity, that drive leverage beyond 2.75x in the absence of a
credible de-leveraging plan.

--A downgrade of NBCUniveral's rating could result from the adoption of a more
aggressive financial policy that increases leverage beyond 3.25x on a
sustained basis.

Fitch affirms the following ratings:

Comcast Corporation

--IDR at 'BBB+';

--Senior unsecured Debt at 'BBB+';

--$6.25 billion revolving bank facility (co-borrower with Comcast Cable
Communications LLC) at 'BBB+';

--Short-term IDR at 'F2';

--Commercial Paper at 'F2'.

Comcast Holdings Corporation

--IDR at 'BBB+';

--Subordinated Exchangeable Notes at 'BBB-'.

Comcast Cable Communications, LLC

--IDR at 'BBB+';

--Senior unsecured debt at 'BBB+';

--$6.25 billion revolving bank facility (co-borrower with Comcast) at 'BBB+'.

Comcast Cable Holdings, LLC

--IDR at 'BBB+';

--Senior unsecured debt at 'BBB+'.

Comcast MO Group, Inc.

--IDR at 'BBB+';

--Senior unsecured debt at 'BBB+'.

Comcast MO of Delaware, LLC

--IDR at 'BBB+'.

Fitch affirms the following ratings for NBCUniversal with a Stable Outlook:

NBC Universal Media, LLC

--IDR at 'BBB';

--Senior unsecured debt at 'BBB'.

--Senior Unsecured Revolver at 'BBB';

--Short-term IDR at 'F2'

--Commercial Paper at 'F2'

Universal City Development Partners, Ltd.

--IDR at 'BBB';

--Senior unsecured debt at 'BBB';

--Senior subordinated debt at 'BBB-'.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug.8, 2012);

--'Parent and Subsidiary Rating Linkage (Fitch's Approach to Rating Entities
Within a Corporate Group Structure)' (Aug. 8, 2012);

--'Rating Telecom Companies' (Aug. 9, 2012).

Applicable Criteria and Related Research:

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

Rating Telecom Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682323

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Primary Analyst:
David Peterson, +1-312-368-3177
Senior Director
70 W. Madison,
Chicago, IL 60602
or
Secondary Analyst:
John Culver, CFA, +1-312-368-3216
Senior Director
or
Committee Chairperson:
Mike Weaver, +1-312-368-3156
Managing Director
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement