Insight Midwest L.P. Ratings Lowered To 'BB-' On Heightened Business Risk; Outlook Negative
NEW YORK (Standard & Poor's) June 1, 2005--Standard & Poor's Ratings Services
said today that it lowered its ratings of New York City, N.Y.-based cable TV
operator Insight Midwest L.P., (Insight Midwest), including the corporate
credit rating on Insight Midwest, which was downgraded to 'BB-' from 'BB'. The
corporate credit rating and senior unsecured debt rating on 50% owner Insight
Communications Co. Inc. (Insight) were both also lowered to 'CCC+' from 'B-'.
The only assets Insight has are its 50% share of Insight Midwest, cash of
$30 million on its own as of March 31, 2005, and a $100 million non-cash pay
loan to Insight Midwest, which accretes at 9% annually, and is currently
approximately $130 million (see our release on Insight Communications, also
published today). Standard & Poor's outlooks on Insight Communications and
Insight Midwest are negative.
"The downgrade on Insight Midwest reflects the heightened business risk
experienced by the company over the past year to 15 months, as exemplified by
its continued loss of basic subscribers, largely because of competitive
factors that are not expected to abate over the next few years," said Standard
& Poor's credit analyst Catherine Cosentino. Moreover, the company has had
very limited success in deploying and managing telephony operations under a
previous partnership with Comcast that was dissolved in late 2004. Therefore,
Insight Midwest's ability to aggressively increase this business on its own in
2005 and beyond is highly uncertain. With telephony currently available in
only four of the company's 14 markets, this service is not expected to provide
a meaningful contribution to Insight Midwest's overall revenue and/or
operating cash flow levels in 2005, providing the incumbent local exchange
carriers the opportunity to effectively promote their own "triple-play"
product.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action can be found
on Standard & Poor's public Web site at www.standardandpoors.com; under Credit
Ratings in the left navigation bar, select Find a Rating, then Credit Ratings
Search.
| Primary Credit Analyst: | Catherine Cosentino, New York (1) 212-438-7828; catherine_cosentino@standardandpoors.com |
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