S&P affirms Time Warner

Standard & Poor's said it affirmed the BBB+ corporate credit rating and all issue ratings of Time Warner Inc. (BBB+/negative/A-2) and subsidiaries, following the company's announcement that Time Warner will be acquiring from Liberty Media Corp. (BB+/Watch negative) the 50% stake in Court TV that it does not already own, for $735 million in cash.

The agency said that the transaction gives Time Warner the cash flow and control of a strategic programming asset but reduces the company's financial headroom in a financial structure already stretched by the company's $20 billion share repurchase plan.

The outlook is negative.

The ratings on Time Warner reflect the company's strengths in cable networks, cable systems, TV and feature film production and publishing, consistent performance in most of its businesses and moderate capital structure, S&P noted, adding that these strengths are tempered by aggressive share repurchases, competitive pressures in all Time Warner units from well-capitalized peers, mature growth trends in certain businesses, technology shifts and higher business risk at subsidiary AOL LLC (BBB+/negative) as management restructures its business model.

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