Standard & Poor?s revised its outlook on Sky Brazil from negative to positive on Tuesday, August 19, reaffirming the ?CCC+? rating for local- and foreign-currency debt. In a press release S&P said the outlook revision reflects Sky?s ?continuously improving operating and financial performance despite a sluggish macroeconomic environment in Brazil?, and the ?financial support of 36% investor News Corp. Ltd.? News runs the Brazilian DTH subsidiary and officially owns 36%, but its equity holding is stated as almost 50% in the group?s published financial reports.
S&P also said the upgrade reflects ?the increasing relevance of the region to News Corp?s strategy?, adding that this relevance could be ?further enhanced? if Sky and DirecTV consolidate their Latin American operations.
Sky Brazil?s ratings themselves may be upgraded, the release goes on, if there?s ?a continued improvement in [its] operating and financial performance under a more positive macroeconomic scenario, coupled with a successful resolution of the outstanding Senior Secured Notes prior to maturity in August 2004?. This short-term debt amounts to over 209 million US Dollars.
In recent weeks Globo and News Corp have been discussing the possibility of a change in Sky Brazil?s ownership structure. They have evidently abandoned a deal signed in 2002 whereby News agreed to increase its investment without obliging Globo to follow suit. Both parties must now invest the same amount, but Globo is restructuring debts and assets and can?t be sure of its financial future. Hence the increasing importance of relations between Globo and News Corp. for the future of Sky Brazil.