Moody’s Investors Service has upgraded its credit ratings for Local TV LLC, based on the company’s deal to buy WGNT-TV (CW) Norfolk, VA from CBS and on better than expected operating performance.
The purchase for $16.5 million will give Local TV a duopoly in Norfolk with WTKR-TV (CBS).
The company can fund the acquisition and modest related expenses from balance sheet cash without materially depleting its strong liquidity position, and we anticipate the incremental cash flow will over time contribute to ongoing declines in financial leverage.
Moody’s, which rates approximately $500 million of debt at Local TV LLC, upgraded the company’s corporate family rating to Caa1 from Caa2 and did the same for its probability of default rating. Moody’s said privately owned Local TV had 12-month trailing revenues of approximately $140 million at the end of March. It owns nine TV stations – soon to be 10.
The same management team runs FoxCo Acquisition Sub LLC, which owns eight TV stations. Moody’s affirmed the Caa1 corporate family rating of FoxCo Acquisition Sub and changed the rating outlook to stable from negative based primarily on “expectations for a better cushion of compliance with bank financial covenants” as ad revenues recover. FoxCo Acquisition has approximately $700 million of rated debt and according to Moody’s its revenue for the trailing twelve months through March 31st was approximately $275 million.