The analysts at Moody’s Investors Service have looked at the $320 million deal to have Dish Network buy Blockbuster out of bankruptcy and given it a thumbs-up.
“The purchase will not impact Dish’s ratings due to its significant financial flexibility relative to its credit ratings,” Moody’s said. As of December 31, Dish had over $2.9 billion of cash and marketable securities, the ratings agency noted, and Moody’s expects that the company will generate around $1 billion of free cash flow in 2011.
“The company has about $1 billion of [debt] maturities in 2011, but the cash and free cash flow should be sufficient fund the Blockbuster acquisition, invest new capital to begin retooling the Blockbuster business and repay the maturity if it is not refinanced in the public markets,” said Moody’s Sr. VP Neil Begley.
“The Blockbuster assets are not an intuitive fit for Dish, but there could be strategic vertical integration opportunities for Dish if it can successfully turn around and reinvigorate this important though tarnished brand name,” added Begley.