Fitch Rates Comcast's Sr. Unsecured Notes 'A-'; Outlook Stable

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned an 'A-' rating to Comcast Corporation's (Comcast) benchmark size, senior unsecured notes maturing 2025, 2035 and 2045. Proceeds from the offering are expected to be used for general corporate purposes which may include the repayment of debt scheduled to mature during the remainder of 2015 and first half of 2016. The notes will be guaranteed by Comcast's subsidiaries included in the company's cross-guaranty structure. The Rating Outlook for all of Comcast's ratings is Stable. As of March 31, 2015 Comcast had approximately $47.3 billion of debt and preferred stock outstanding, including $10.3 billion outstanding at NBCUniversal Media, LLC (NBCUniversal).

KEY RATING DRIVERS

Comcast's capital structure and financial strategy remain consistent and centered on reducing leverage to its target ranging between 1.5x and 2.0x. Fitch expects Comcast's credit profile will continue to strengthen.

Fitch believes Comcast's strong operating profile and solid free cash flow metrics afford the company a high degree of financial flexibility at the current rating category.

Fitch does not expect any material change to Comcast's capital allocation strategy over the near term and believes there is sufficient capacity within the ratings to accommodate the planned $6.75 billion share repurchase during 2015.

Comcast's leverage metric through the LTM period ended March 31, 2015 was 2.0x reflecting a modest improvement from 2.1x as of year-end 2014. Fitch continues to believe that Comcast's credit profile will be relatively consistent during 2015 and expects leverage to approximate 2x as of year-end 2015.

Comcast's capital allocation policy is expected to remain relatively consistent and focused on returning capital to its shareholders while continuing to invest in the strategic needs of its business. Fitch expects that share repurchases will total approximately $6.75 billion during 2015 in line with management guidance. Fitch's expectation that shareholder returns as a percentage of pre-dividend cash flow will increase during the ratings horizon is incorporated into the ratings. Cash returned to shareholders (dividends plus buybacks) totaled approximately $6.5 billion or approximately 68% of cash flow before dividends during year end 2014. Comcast's board of directors authorized a $10 billion share repurchase program in February 2015. Approximately $8 billion of share repurchase capacity remains under the current authorization as of March 31, 2015.

Comcast's ratings reflect its strong competitive position as one of the largest video, high speed internet and phone providers to residential and business customers in the United States and the company's compelling subscriber clustering profile. In Fitch's view, NBCUniversal's size, scale, leading brand positions and diversity of operations and business risk as one of the world's leading media and entertainment companies, lower the business risk attributable to Comcast's credit profile.

Comcast's liquidity position and overall financial flexibility are strong based on Fitch's expectation that the company will continue to generate material amounts of free cash flow (FCF - defined as cash flow from operations less capital expenditures and dividends). Comcast generated approximately $7.5 billion of FCF during the LTM period ended March 31, 2015. Going forward Fitch anticipates that the company will consistently generate consolidated free cash flow in excess of $7 billion.

Fitch acknowledges that Comcast's share repurchase program represents a significant use of cash; however, Fitch believes that the company would reduce the level of share repurchases should the operating environment materially change, in order to maximize financial flexibility.

The liquidity position is further supported by cash on hand (which totaled approximately $3.9 billion on a consolidated basis as of March 31, 2015) and $6.6 billion of collective available borrowing capacity (as of March 31, 2015) from Comcast's two revolving credit facilities. Commitments under Comcast's $6.25 billion revolver will expire during June 2017 while the commitments related to NBCUniversal Enterprise's $1.35 billion revolver expire during March 2018.

Comcast's debt maturity profile is well-laddered and within Fitch's FCF expectation. Maturities total approximately $1.5 billion during the remainder of 2015 excluding outstanding commercial paper, followed by $3.5 billion during 2016 and $2.6 billion during 2017.

RATING SENSITIVITIES

A positive rating action would likely coincide with Comcast achieving and committing to a financial policy consistent with an 'A' rating, including maintaining its leverage below 1.5x on a sustained basis. Comcast would need to demonstrate that its operating profile will not materially decline in the face of competition.

Negative rating actions would likely coincide with discretionary actions of Comcast's management including, but not limited to, the company adopting a more aggressive financial strategy, or event-driven merger and acquisition activity, that drive leverage beyond 2.5x in the absence of a credible deleveraging plan.

Fitch currently rates Comcast as follows:

Comcast Corporation

--Long Term IDR 'A-';

--Senior unsecured debt 'A-'

--$6.25 billion revolving bank facility (co-borrower with Comcast Cable Communications LLC) 'A-';

--Short-term IDR 'F2';

--Commercial Paper 'F2'.

Comcast Holdings Corporation

--IDR 'A-';

--Subordinated exchangeable notes 'BBB'.

Comcast Cable Communications, LLC

--IDR 'A-';

--Senior unsecured debt 'A-';

--$6.25 billion revolving bank facility (co-borrower with Comcast) 'A-'.

Comcast Cable Holdings, LLC

--IDR 'A-';

--Senior unsecured debt 'A-'.

Comcast MO Group, Inc.

--IDR 'A-';

--Senior unsecured debt 'A-'.

Comcast MO of Delaware, LLC

--IDR 'A-'.

NBC Universal Media, LLC

--IDR 'A-';

--Senior unsecured debt 'A-'.

NBCUniversal Enterprise, Inc.

--IDR 'A-';

--Senior unsecured debt 'A-';

--$1.35 billion revolving bank facility 'A-';

--Series A preferred stock 'BBB';

--Short-term IDR 'F2';

--Commercial Paper 'F2'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 28, 2014).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984965

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150519006964/en/

Fitch Ratings
Primary Analyst
David Peterson
Senior Director
+1-312-368-3177
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
John Culver, CFA
Senior Director
+1-312-368-3216
or
Committee Chairperson
Bill Densmore
Senior Director
+1 312 368-3125
or
Media Relations
Alyssa Castelli, +1 212-908-0540
[email protected]
Elizabeth Fogerty, +1 212-908-0526
[email protected]

Source: Fitch Ratings

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