Moody's rates CKX B3; loans B1, Caa2

Moody's Investors Service said it assigned B3 corporate family and probability of default ratings to CKX Entertainment, Inc., as well as B1 (LGD 2, 26%) ratings to its $200 million senior secured first-lien term loan and $35 million senior secured revolver.

The agency also said it assigned a Caa2 (LGD 5, 79%) rating to its $160 million senior secured second-lien term loan.

The existing $35 million revolver remains in place at CKX, Inc., an intermediate holding company, and is currently undrawn.

The proceeds were used to refinance CKX's bridge facility put in place in June when Apollo Group Management, LLC purchased the company for an implied equity value of $511 million, Moody's said.

The outlook is stable.

The ratings reflects the company's moderately high leverage of 4.9x as of Sept. 30, 2011, the agency said, along with its high concentration of EBITDA attributable to the American Idol television show and ancillary revenue.

The ratings also consider a weaker-than-anticipated 2011 performance from American Idol ancillary businesses and Graceland operations, the expected cancellation of its Viva Elvis show and an expectation of an increase in competition from similarly themed entertainment-based shows.

The ratings also are constrained by the company's modest scale and a belief that leverage will increase over time absent a deleveraging acquisition, Moody's added.

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