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| S&P
outlook on AOL Time Warner negative
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Our Corporate Bureau
27 July 2002 |
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S&P
outlook on AOL Time Warner negative
Our Corporate
Bureau
27 July 2002
New
York: The
weak operating performance of AOL business units (Internet
services) has impacted the outlook for AOL Time Warner
Inc. The global rating agency Standard & Poors (S&P)
has revised its outlook for the company to negative from
the earlier stable tag.
 The
city-based AOL Time Warner is the largest US media company
with vertically integrated positions in publishing, music,
filmed entertainment, cable networks, cable television,
and Internet services.
S&P is also concerned with AOLs weaker than expected
operating performance. The status may continue due to
deteriorating advertising sales that could weaken credit
measures, says S&P analyst Heather Goodchild. The
decline in America Online EBITDA places a burden on the
Time Warner divisions to deliver performance that will
meet earnings targets.
Says S&P credit analyst Andrew Watt: Traditional
advertising channels are in the early stages of a weak
recovery. Greater concern surrounds the timeframe for
a recovery in Internet spending.
In addition, the SEC inquiry announced by the company
on 24 July 2002 adds to recent investor uncertainty and
could consume significant management time and attention
as it strives to stabilise operating performance. Last
week the company reorganised its organisational set up,
which according to S&P is a positive step.
S&P
has, however, affirmed its ratings, including its triple-B-plus
corporate credit rating on the company and also for the
companys new $10-billion revolving credit facility. This
rating reflects the solid operating performance of the
companys remaining business units, strong market positions,
diversified operations as the largest media company, a
moderate financial profile, and adequate liquidity, says
Goodchild.
reports
on entertainment
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