S&P: No change for Unity Media

Standard & Poor's said its B rating and positive outlook on German cable-TV operator Unity Media GmbH are unchanged by the company's announcement that it will grant pay-TV company Premiere AG nationwide satellite marketing and distribution rights of its operating subsidiary arena's current and future pay-TV sports channels and programming, including arena's current Bundesliga program, on a non-exclusive basis. Unity Media has secured long-term distribution of all Premiere's content to its cable customers, the agency added.

As consideration, Unity Media will receive significant minimum revenue guarantee payments and 16.4 million new ordinary shares in Premiere, representing about 16.7% of Premiere's enlarged share capital. Therefore, the agency said, the risk of gaining sufficient subscriber uptake for the Bundesliga program has moved to Premiere and proceeds from the disposal of Premiere shares should enable Unity Media to realize significant cash proceeds after a minimum holding period of six months. Unity Media's liquidity is strong with €330 million cash as of Feb. 8 and an undrawn revolving credit facility of €130 million, the agency said.

Nevertheless, S&P said, the deal limits Unity Media's potential for increasing EBITDA and free cash flow generation from arena, as it will now receive only wholesale margins for the satellite marketing and distribution rights of the Bundesliga.

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