National Cinemedia and Screenvision put on the credit for negative watch by S&P Global – Deadline

S&P Global has hit the showbiz industry again, this time against struggling cinema advertising, putting National Cinema and Screen vision on credit, negative watch because cinemas are closed and advertising in danger.

Rating agencies like S&P Global, Moody’s and Fitch can go silent for years and rarely face the public – but they emerge in force during financial crises like the one the world is currently experiencing thanks to the coronavirus broadcast. Their ratings indicate a company’s creditworthiness, its probability of default, and the chances that lenders will be repaid. Firms with high debt and due payments are particularly vulnerable to economic shocks, as they could run out of cash in a crisis to meet payments, which would trigger a default. A bad credit rating makes borrowing money much more expensive for a business. Companies can often renegotiate with current lenders for extensions or better terms. But a bad credit rating makes borrowing money much more expensive for a business.

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On NationalCinemedia, S&P said movie theater attendance will drop significantly in 2020 as movie releases are delayed and theaters are closed due to the coronavirus. and limitations on the size of public gatherings. At the same time, we expect the drop in consumer spending due to the spread of the virus to lead to a drop in domestic ad spending. We believe this combination will result in a significant drop in EBITDA and cash flow in 2020 for National Cinemedia, which is paid by advertisers based on the number of impressions they can deliver.

The rating agency has roughly the same judgment on Screenvision.

Screenvision is majority owned by Boston-based private equity firm Abry Partners. National Cinemedia, listed on the stock exchange, is a company between AMC Entertainment and Regal (a subsidiary of the British cinema chain Cineworld).

S&P is not yet downgrading corporate credit ratings but is monitoring them closely. He said he would refine his decision as he obtains “additional information on the length of cinema closings, potential updates to the list of film releases, and the effects on domestic advertising spending.” related to the coronavirus. We also plan to continue discussions with management to monitor the severity of the impact and the mechanisms they are using to offset the negative impact of the pandemic on the company’s cash flow. “

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