Fitch boosts Disney’s ratings to “A”
June 28th, 2008Fitch Ratings said Thursday it has upgraded Walt Disney Co.’s ratings to “A” on the media and entertainment company’s leading market positions, strong cash flows and financial flexibility.
Fitch boosted Disney’s investment-grade issuer default rating and senior unsecured debt rating to “A” from “A-.” The ratings service also raised Disney’s commercial paper program rating to “F1″ from “F2.”
The ratings outlook is Stable.
Fitch said Disney has benefited from strength at its cable networks, which has resulted in significant increases in stable carriage fees. Nearly all of Disney’s business segments have improved as the company has successfully leveraged its hit-driven brands across multiple distribution platforms, Fitch said.
The ratings service said Disney’s credit concerns center on the volatility of its theme parks and resorts, studio and broadcast network businesses.
Fitch also noted that share buyback activity, which has been aggressive, could become a concern if it is sustained when there is operational weakness.
Disney shares dropped with the broader market on Thursday, losing 80 cents, or 2.5 percent, to $31.69 in afternoon trading. The stock has traded between $26.30 and $35.69 during the past 52 weeks.