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Investing.com -- Moody’s Ratings has downgraded AMC Networks (NASDAQ:AMCX) Inc.’s corporate family rating (CFR) to B3 from B2, reflecting ongoing operational challenges and limited visibility on performance stabilization.
The ratings agency also downgraded AMC Networks’ probability of default rating to B3-PD from B2-PD and lowered ratings on senior secured bank credit facilities to B2 from Ba3. Additionally, senior secured notes were downgraded to B2 from Ba3 and senior unsecured notes to Caa2 from Caa1.
Moody’s assigned a B2 rating to the proposed $400 million senior secured notes due 2032 while maintaining the company’s SGL-1 Speculative Grade Liquidity Rating. The outlook remains stable.
The one-notch CFR downgrade reflects AMC Networks’ persistent operating challenges as the company continues to experience declining linear subscriber trends affecting its revenue and profitability. The two-notch downgrade to senior secured ratings is partially attributed to changes in the capital structure mix between secured and unsecured debt.
Proceeds from the proposed senior secured notes offering, along with cash from the company’s balance sheet, will refinance all existing term loan A maturing in February 2026 and tender for a portion of the outstanding 4.25% senior unsecured notes due February 2029.
For year-end 2025, Moody’s projects AMC Networks’ total debt-to-EBITDA and net debt-to-EBITDA will be 5.5x and 3.6x respectively, after accounting for the proposed financing.
Despite investing approximately $1 billion annually in content creation for its branded networks and direct-to-consumer platform, declining linear viewership continues to negatively impact distribution fees and advertising sales. Moody’s projects domestic distribution fees and advertising sales to decline by mid-single digits and low double digits respectively.
For 2025 and 2026, AMC Networks’ total revenue is expected to decline by nearly 6% and 4%, compared to a 10.7% decline in 2024.
The ratings reflect expectations for solid free cash flow of around $250 million per year in 2025 and 2026, and a strong commitment to reduce leverage while maintaining very good liquidity despite declining EBITDA trends.
As of March 31, 2025, AMC Networks had approximately $870 million in cash and full availability under its new $175 million revolving credit facility expiring in April 2028.
The stable outlook indicates Moody’s expectations that over the next 12 to 18 months, AMC Networks will maintain very good liquidity, generate significant free cash flow, and continue reducing debt obligations to approach a total debt-EBITDA ratio of 5.0x by year-end 2026.
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