Moody’s Investors Service says the weak advertising market is putting pressure on revenues and cash flow for Univision. The company’s ratings have been downgraded and Moody’s says the outlook for Univision is negative. The credit downgrade applies to approximately $10.6 billion of debt for the Spanish-language radio and TV giant.
Back when Univision went private in a $12.3 billion buyout funded by private equity, the plan was to shed a half billion bucks worth of non-core assets, primarily the company’s record business and radio stations in markets where it does not have TV stations. That stalled out when Univision Music Group brought only $153 million, about half of what had been hoped, and the decline in values made the company pull back on radio station sales. At this point, Moody’s says “asset sales are unlikely to improve credit metrics significantly.”
Moody’s analysis is that Univision “has only adequate liquidity through the end of 2009.” The company is expected to “maintain a modest cushion” under its debt covenants. That calculation is based on Moody’s assumption that advertising revenues will drop 10-15% in 2009, countered somewhat by retransmission consent revenues and cost savings.