S&P turns Screenvision view to negative

S&P said it changed its outlook for Screenvision LLC to negative from stable and affirmed its ratings, including the B- rating on the company’s floating-rate loans.

“An increasing risk of a U.S. recession is likely to limit growth in spending for in-theater advertising. S&P Global economists recently raised the risk of a U.S. recession to 35%-45% (midpoint 40%) due to ongoing macroeconomic challenges such as inflation and rising interest rates. The advertising market has historically been heavily correlated to GDP growth, and we believe discretionary advertising spending such as in-theater scatter advertising would be significantly hurt in the event of a recession,” the agency said in a press release.

The weaker outlook reflects the risk that the expected recovery in theater attendance and in-theater advertising could be slower than expected leading to sustained high leverage and negative free operating cash flows such that S&P would view the capital structure as unsustainable, the agency said.

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