Disney Maintains a Stable “A-” Debt Rating Outlook in Latest Fitch Financial Analysis
However, there is some wariness around the company’s theme parks and cruise line expansions putting pressure on cash flow and earnings growth.
As we begin 2025, Fitch Ratings has labeled the Walt Disney Company’s debt rating as stable, albeit with some notes of caution added.
What’s Happening:
- Per Hollywood Reporter, Fitch Ratings has declared Disney is in a good position to manage its debt levels. The company has affirmed Walt Disney Co.’s debt valuations at an A- rating, keeping the company’s rating outlook stable.
- Fitch, who provides credit ratings and analysis for financial markets, did have some warnings on near-term investments due to expansions in Disney’s theme parks and cruise line fleet putting pressure on their cash flow and earnings growth. Fitch forecasts “multiple headwinds (to) blunt near-term credit improvement as significant capex across theme parks and cruise lines negatively impacts expected FCF (free cash flow)."
- Fitch also flagged “Disney increasing its dividend and share repurchase activity in place of accelerated debt reduction" and noted that they expected that the upcoming final payment Disney will be making to Comcast to fully acquire Hulu will be as much as $5 billion and largely debt-financed.
- However, despite those flags, Fitch is rosy on Disney’s continued business strategy to leverage their popular IP across their many platforms, including their theme parks and cruise line. Said Fitch, “Disney is uniquely positioned to capitalize on and monetize franchises and brands across multiple platforms, which strengthens its operating and credit profile and provides the company with a sustainable competitive advantage."
- Fitch forecasts continued success in streaming for Disney, believing the company will generate approximately $1 billion in operating income in fiscal 2025. However, they caution a trouble spot will continue to be the linear TV networks Disney owns and their struggle in the streaming age.
- The A- debt rating is the same Fitch gave Universal’s owner, Comcast, which Fitch describes as “the closest media comparison to Disney, given its size, scale and leverage metrics."
- Comparatively, Fitch has given a BBB- rating and a negative outlook to Warner Bros. Discovery and Paramount Global.
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