Moody’s Investors Service assigned a B1 rating to the proposed first lien credit facility of ION Media Networks. ION plans to use proceeds of the $720 million term loan to fund a shareholder dividend. Media Holdco is the primary owner of ION Media with an 87% equity ownership and therefore the largest recipient of the dividend. Media Holdco will use a portion of its dividend proceeds to repay its $253 million of outstanding debt.
ION Media O&Os the ION Television network through O&O broadcast stations in the U.S. as well as through carriage agreements with MVPD providers. ION also owns and operates the Qubo and ION Life television networks.
The outlook is stable:
ION Media Networks, Inc.
–$75mm First Lien Revolver, Assigned B1, LGD3, 33%
–$720mm First Lien Term Loan, Assigned B1, LGD3, 33%
–Corporate Family Rating, B1
–Probability of Default Rating, B2-PD
From the release: “Moody’s expects ION Media’s revenue growth to exceed television advertising industry growth over the next two years as it continues to shift hours to scripted programming and away from infomercials, and its demonstrated success with this strategy in the prime time day part provides a track record for achieving similar success during non-prime periods. Furthermore, Moody’s believes ION Media can continue to win modest incremental share from other cable networks and gain some pricing lift. Nevertheless, while ION Media has to date secured access to third party content at cost-effective rates, inherent risk exists in evaluating the costs relative to the potential audience. Also, changing consumer behavior for viewing content creates the risk of audience erosion, which would pressure ad revenue. Moody’s does not envision transformative changes in either viewing behavior or advertising spending that would materially impact ION Media’s growth over the next couple of years, but as business conditions evolve, the leverage target might need to migrate lower to sustain the rating.”