TEXT-S&P: Comcast, Disney ratings are unchanged

Wed Jul 11, 2012 10:11am EDT

July 11 - Standard & Poor's said today that the Comcast Corp. 
(BBB+/Stable/A-2) and The Walt Disney Co. (A/Stable/A-1) ratings and
outlook are unaffected by the announced agreement by its NBCUniversal unit to
sell its 15.8% interest in A&E Television Networks LLC for $3.025 billion in
cash. The other owners in A&E include Hearst Corp. (unrated) and Walt Disney
Co., which each own approximately 42%. Given Comcast Corp.'s relatively small
stake in A&E, we did not view this as a strategic investment for them, and
therefore it has no effect on Comcast's overall "strong" business risk
assessment. Moreover, since Comcast held a minority, noncontrolling stake in
A&E, it did not contribute significantly to the company's overall financial
profile. Proceeds received from this transaction 
would provide a partial funding source for Comcast's increased ownership in 
NBCUniversal, which is currently owned 49% by General Electric. Under the 
ownership agreement, we expect Comcast's stake in NBCUniversal to rise to 
nearly full ownership between 2014 and 2019, which could result in leverage 
increasing to the high-2x area, from 2.3x as of March 31, 2012.

Disney's move to raise its stake in A&E does not affect its rating, despite 
Disney's leverage that is currently near our 2x threshold for its 'A' rating. 
We assume that the issuance of debt at the A&E level will be supported by a 
reduction in cash distributions to its shareholders. Although we have been 
including dividends from minority investments in our calculation of Disney's 
EBITDA and leverage, we expect the transaction will minimally increase 
leverage. We anticipate that Disney's discretionary cash flow, EBITDA growth, 
and ability to moderate its pace of share repurchases will enable it to 
neutralize leverage pressure over the next three to five years. We view A&E as 
a logical and strategic investment for Disney that complements its existing 
business profile.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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