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Investing.com -- Moody’s Ratings has affirmed the B3 corporate family rating (CFR) of The Scripps (E.W.) Company and has downgraded the probability of default rating (PDR) to Caa1-PD from B3-PD. The outlook for the company has been revised from stable to negative.
The B2 ratings on Scripps’ existing senior secured bank credit facilities have been affirmed. These include the $721 million outstanding term loan B-2 due May 2026, the $545 million term loan B-3 due January 2028, and the $585 million revolving credit facility due January 2026. The B2 rating on the $523 million outstanding 3.875% senior secured first-lien notes due January 2029 and Caa2 ratings on the senior unsecured notes were also affirmed. Scripps’ Speculative Grade Liquidity rating remains unchanged.
The downgrade of the PDR reflects Moody’s view that Scripps is likely to negotiate debt exchanges and maturity extensions with its existing term loan lenders in the coming months. This is due to the impending maturity of the TLB-2 in May 2026 and the need to refinance the revolving credit facility, which matures in January 2026.
The change in outlook to negative is due to structural and secular pressures in Scripps’ business, the likely distressed debt exchange transactions, and the potential for additional distressed exchanges to address the notes maturing in 2027. The negative outlook also reflects the refinancing risk associated with the growing principal balance on the $688 million outstanding preferred shares, which is increasing at a 9% PIK rate compounded quarterly.
The B3 CFR reflects Moody’s medium to long-term expectation for continued pressure on retransmission revenue growth due to increasing pace of subscriber losses arising from secular cord-cutting trends, as well as ongoing weakness in Scripps’ linear TV core advertising growth. Scripps’ high financial leverage, which was 6.3x total debt to EBITDA at LTM 30 September 2024, is also reflected in the B3 CFR.
Scripps’ ESG credit impact score has been changed to CIS-5 from CIS-4 due to increasing exposure to governance risk, chiefly influenced by financial strategy and risk management as well as management credibility and track record.
The Scripps (E.W.) Company, headquartered in Cincinnati, OH and founded in 1878, owns and operates 61 local television stations in 42 markets and 44 ION stations across 8 national networks. The company is publicly traded with the Scripps family controlling effectively all common voting rights (93%) and an estimated 28% economic interest, with remaining shares widely held. Revenue at LTM 30 September 2024 totaled approximately $2.4 billion.
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