DUFF & PHELPS UPGRADES CBS INC. TO 'A+'
CHICAGO, Sept. 28 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has upgraded the rating on CBS Inc.'s senior notes and debentures to "A+" (Single-A-Plus) from "A" (Single-A). Approximately $400 million of debt is affected by the rating action. The "A+" rating also applies to the New York City Industrial Development Agency's proposed $100 million, series A, taxable industrial development revenue bonds (a CBS Inc. project); this rating is based on the unconditional guarantee of CBS Inc. The rating recognizes CBS Inc.'s solid financial fundamentals including good internal cash flow and a strong balance sheet. The company's strong operating cash flow reflects CBS's leadership position in prime time and day time viewership which has helped bolster network unit pricing. In addition, ongoing cost containment measures have helped to offset a soft local advertising market in the television stations and radio divisions. Further improvement is anticipated in internal cash generation in 1994 following the completion of payments on baseball and football contracts for which write-offs were recorded in 1990 and 1991. CBS's liquidity is excellent with $1.3 billion in cash and equivalents at June 30, 1993. Interest and dividend income from these holdings was nearly double interest expense in the first half of 1993. Cash and equivalents exceeded total debt by a multiple of well over two to one. Financial leverage was sharply reduced in May 1993 by the forced conversion of $390 million of convertible debentures into common equity. The fixed obligation ratio fell from 61 percent at March 31, 1993, to 35 percent at June 30, 1993 (39 percent pro forma for the proposed debt issue). A further gradual decline in financial leverage is expected longer-term through increases in retained earnings. The Duff & Phelps rating also considers the possibility that CBS's substantial cash resources and borrowing capacity could be utilized for sizable acquisitions and share repurchases, resulting in reduced liquidity and increased financial leverage. The rating also recognizes the company's high dependence on cyclical advertising revenues and the potential for an escalation of programming costs, particularly in the area of major sports rights where bidding has tended to be aggressive. CBS Inc.'s operations consist of the following broadcast properties: the CBS Television Network, seven owned and operated television stations, two radio networks and 21 owned and operated radio stations. -0- 9/28/93 /CONTACT: Doris S. Nakamura of Duff & Phelps Credit Rating Co., 312-368-3130/ (CBS)
CO: CBS Inc. ST: New York IN: ENT SU: RTG
TW -- NY043 -- 6327 09/28/93 11:10 EDT
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|Date:||Sep 28, 1993|
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