Moody's cuts Liberty Media outlook to negative

Moody's Investors Service said it changed Liberty Media LLC's outlook to negative from stable following the establishment of a new $1.75 billion credit facility at QVC, Inc., Liberty's primary operating subsidiary. The Ba2 corporate family and senior unsecured debt ratings were affirmed.

The change in the outlook to negative reflects Moody's concern over Liberty's more aggressive financial strategies and profile and the possibility that QVC may use the roughly $2.3 billion of combined unused capacity on the new facility and the existing $3.5 billion credit agreement to upstream funds to Liberty for share repurchases and acquisitions that will increase leverage.

The agency said it believes there is little evident need for incremental external financing due to QVC's good cash generation and Liberty's sizable consolidated cash balance ($2.7 billion at June 30) and that the establishment of the new facility indicates that leverage could be higher than previously anticipated.

The agency is also concerned that the level of support for Liberty Media's bonds could decline through expansion in the level of subsidiary debt, which would increase the degree of structural subordination to assets and cash flow of the operating subsidiaries, or through material changes in the value or risk profile of cash and marketable securities through returning cash to shareholders or swaps for speculative operating assets.

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