Fitch Rates Cox Communications' $1B Senior Notes 'BBB-'; Outlook Stable.

CHICAGO -- Fitch Ratings has assigned a 'BBB-' rating to Cox Communications, Inc.'s (CCI) offering of $600 million senior unsecured notes due 2016 and $400 million senior unsecured notes due 2036. The proceeds from the offering are expected to be used for general corporate purposes including reducing outstanding amounts under the company's revolving credit facility. The Rating Outlook for all of CCI's ratings is Stable. As of Sept. 30, 2006, CCI had approximately $11 billion of debt outstanding.

Fitch's ratings and Stable Outlook continue to reflect the operating efficiencies provided by CCI's strong cable system clustering, as approximately 87% of the company's basic video subscribers as of Sept. 30, 2006 are located within its top 11 markets, CCI's focus on its service bundling strategy, solid operating results, and improving credit profile. Also incorporated into Fitch's ratings is the growing competitive threat posed by direct broadcast satellite (DBS) providers, regional bell operating companies (RBOCs) and new industry participants.

In Fitch's opinion, CCI's service bundling strategy has enhanced the company's competitive position relative to the DBS providers and the RBOCs. CCI is better positioned to maintain market share than the DBS and RBOC competitors. Indicative of CCI's success in bundling services, as of Sept. 30, 2006 the percentage of CCI's basic video customers subscribing to two or more services increased to approximately 62% reflecting 11.4 percentage points of incremental penetration relative to the same period last year.

During the three-month period ending Sept. 30, 2006, Fitch estimates that CCI has added over 400,000 revenue generating units (RGUs) driven by strong subscriber growth metrics across each of CCI's service offerings. CCI's service bundling strategy will further diversify the company's customer and revenue base and position the company for further revenue growth and average revenue per unit (ARPU) expansion during 2007.

Fitch calculated leverage was 4.0 times (x) for the latest 12-month period ended Sept. 30, 2006, which is in line with Fitch's year-end (YE) 2006 expectations. CCI's leverage metric was 5.0x as of YE 2005. The improvement in CCI's leverage metric was largely facilitated by the debt reduction following the sale of certain cable systems serving approximately 940,000 RGUs. CCI's liquidity position is supported by available borrowing capacity from the company's $3.5 billion revolving credit facility. Also adding to CCI's financial flexibility is its 25% stake in Discovery Communications, Inc. Free cash flow during the latest 12 month period ending Sept. 30, 2006 was negative $100 million as calculated by Fitch (which includes income taxes of approximately $600 million related to the sale of certain cable systems but does not include $2.5 billion of gross proceeds from that sale).

Fitch has converged the ratings of CCI with its parent company, Cox Enterprises, Inc. (CEI) to reflect the unified management control and limited restrictions on the movement of cash between the entities. Intercompany dividends, loans or advances are not restricted if each entities' leverage is below or equal to 5.0x, and limited to $250 million annually if leverage is above the threshold. Fitch believes CCI would use its free cash flow to support CEI's other businesses and vice versa if needed. The ratings for CEI continue to be supported by strong business and geographic diversification, and material free cash flow generation. Concerns include secular challenges related to its newspaper and TV broadcast business. Fitch's analysis looks at metrics for the consolidated CEI entity, as well as metrics and covenant compliance at the stand-alone entities of CEI (excluding CCI) and CCI.

Fitch's Stable Rating Outlook reflects the expected continued improvement of CCI's credit profile within the current rating category and for the company's bundling strategy to generate solid operating metrics and to strengthen CCI's competitive position relative to DBS and RBOC competitors. For additional information, please refer to the following credit updates, both of which are available on the Fitch Ratings web site at www.fitchratings.com.

--Cox Enterprises (Nov. 22, 2006);

--Cox Communications (June 8, 2006).

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.