Moody’s May Cut Disney’s Credit Rating

Moody’s Investors Service said Monday that it may cut Walt Disney Co.’s long-term credit ratings because theme park attendance is falling and fewer people are watching or buying advertising on the ABC television network.

The news helped drive Disney’s shares to a new eight-year low.

Moody’s rating review followed a similar downgrade warning Friday from Standard & Poor’s.

Moody’s expressed worry over Disney’s theme park operations. It also said it has ongoing concerns about the company’s $15-billion debt load and viewership and advertising levels at ABC’s networks.

“Moody’s remains concerned that given ABC’s lagging audience share it may experience greater negative volatility should a ‘double-dip’ advertising recession take hold,” the firm said.

Moody’s said it may cut Disney’s long-term debt rating, now A3. That is Moody’s fourth-lowest investment grade rating. The firm also said it may cut the A2 ratings of Disney Enterprises and ABC.

Lower debt ratings would raise Disney’s cost of borrowing new money or of refinancing existing debt.

On Thursday, Burbank-based Disney said fiscal third-quarter net profit fell by nearly one-third from a year ago to $364 million, or 18 cents a share. The company also warned that fourth-quarter profit may drop because of weak tourism.

Disney shares, which plunged $1.52 on Friday in the wake of the profit report, slid $1.04 to $14.27 on the New York Stock Exchange on Monday.