Moody's gives CBS Corporation an upgrade


It was just a few days ago that Moody’s Investors Service said it was reviewing its credit ratings of CBS Corporation for a possible upgrade. Well, that didn’t take long. An upgrade it is.

Moody’s upgraded CBS Corporation’s senior unsecured ratings to Baa2 from Baa3, and its short-term ratings to Prime-2 from Prime-3.The ratings agency said the ratings outlook is stable. CBS has approximately $6 billion of debt rated by Moody’s.

“The upgrade reflects the company’s sustained deleveraging and management’s ability and commitment to reduce absolute debt to levels that can support a Baa2 rating even during a recession, which is important given its greater exposure to cyclical revenue than other diversified media industry peers. The company’s leverage has declined steadily to 2.8x (incorporating Moody’s standard adjustments) at 6/30/2011, from 4.7x at 2009 year end, through balance sheet debt and pension debt reduction, as well as EBITDA expansion. CBS experienced double digit EBITDA growth in 2010 and the first half of 2011, largely driven by a rebound in advertising, significant growth in retransmission and reverse-compensation fees, as well as new revenue opportunities from syndication of owned content, and digital distribution of content through players like Netflix and Amazon. These contractual revenues have begun to gradually reduce the company’s exposure to cyclical revenue sources, and are expected to continue growing as the company re-negotiates its affiliate agreements and benefits from increasing competition and demand for the digital distribution of content over the intermediate-term,” the ratings statement said. “We anticipate the company will continue its growth trajectory into 2012, driven by significant political advertising due to the presidential primary and election as well as heavy number of congressional, state and local races, continued benefits from the strong upfront completed earlier this year, and the 2012 Olympics in London, where CBS has a large presence in the outdoor advertising market and television ad demand is expected to pressure pricing. Moody’s does recognize that there are increasing economic headwinds which will likely mitigate some or all of those bi-annual cycle gains in 2012,” Moody’s added.

Ratings actions:


…Senior Unsecured Bank Facility, to Baa2 from Baa3

…Senior Unsecured Regular Bond/Debenture, to Baa2 from Baa3

…Commercial Paper, to P-2 from P-3