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Investing.com -- Moody’s Ratings has assigned a Caa2 rating to E.W. Scripps Company’s proposed $650 million senior secured second-lien notes due 2030, while affirming the company’s Caa1 corporate family rating and changing its outlook from negative to stable.
The rating agency also upgraded Scripps’ probability of default rating to Caa1-PD from Caa2-PD, while maintaining B2 ratings on senior secured debt instruments and Caa3 ratings on senior unsecured notes.
Proceeds from the new notes will fully repay the $426 million outstanding 5.875% senior unsecured notes due July 2027 and pay down approximately $220 million of the $545 million outstanding senior secured first-lien term loan B-2 due June 2028.
Moody’s described the transaction as credit neutral, noting that pro forma financial leverage will remain unchanged at 6.3x. However, the expected higher coupon on the proposed second-lien notes will increase interest expense and reduce future free cash flow.
The stable outlook reflects a lower possibility of near-term distressed exchange and Moody’s expectation for leverage in the 6.5x-7x range, absent debt refinancing of preferred shares.
Scripps faces continued pressure on retransmission revenue growth due to accelerating subscriber losses from cord-cutting trends, along with ongoing weakness in linear TV core advertising growth. The company’s high financial leverage also reflects governance risks captured in Moody’s G-5 governance score and CIS-5 credit impact score.
Moody’s expects Scripps to maintain adequate liquidity over the next 12-18 months. As of March 31, 2025, the company had around $24 million in cash and cash equivalents on a pro forma basis. The company is projected to generate free cash flow of roughly $55-65 million in 2025 and $120-130 million in 2026, an election year.
Scripps is one of the largest U.S. broadcasters, with local television stations broadcasting to 36% of U.S. households (25% excluding local ION affiliates).
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