S&P downgrades Scripps

Standard & Poor’s said it lowered the corporate credit rating on Scripps Networks Interactive Inc. to BBB from A-, along with its debt to BBB from A-.

The outlook is stable.

The two-notch downgrade reflects the company’s increased debt leverage as a result of its agreement to acquire a 52.7% controlling stake in Polish media company TVN SA, S&P said.

As part of the transaction, Scripps also assumed €840 million in public debt, the agency said.

Under Polish securities laws, Scripps must also launch a tender offer for at least 66% of TVN’s stock, which could further increase its stake above the initially announced 52.7%, S&P added.

As a result, the agency said it believes the company’s adjusted leverage could increase to the high-2x range.

The acquisition is expected to somewhat improve the company’s satisfactory business risk profile since it increases the company’s international diversification, S&P said.

The ratings also reflect the company’s above-average EBITDA margins and healthy cash-flow generation from its niche portfolio of ad-supported cable TV networks, which are anchored by HGTV, Food Network and the Travel Channel, the agency said.

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