Fitch assigns BBB+ to Scripps Networks

Fitch Ratings said it assigned an initial issuer default rating of BBB+ to Scripps Networks Interactive, Inc.

The outlook is negative.

As of Dec. 31, Scripps had about $1.5 billion of debt outstanding, pro forma for the repayment of a January maturity.

The negative outlook reflects the elevated leverage related to the company’s recent announcement to acquire a 52.7% controlling interest in Polish television operator TVN for €584 million in cash plus the assumption of €840 million of debt. Fitch calculates pro forma gross leverage at 2.7 times, which exceeds its threshold of 2.5x for the assigned rating. However, the agency expects Scripps to focus on de-levering below 2.5 times within 12-18 months.

Fitch said Scripps’ portfolio of cable networks and leading home and lifestyle programming brands provide the foundation of the ratings is a key rating driver.

Acquisition of controlling stake in TVN is in line with the company's international expansion strategy also drove the rating. The company’s financial priorities remain consistent and focused on internal investment and international expansion. However, the acquisition limits the company's flexibility within the assigned ratings to accommodate operational missteps and share repurchases.

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