As TV Show Idles, Core in Need of Refinancing

NEW YORK (The Deal) -- Television production company Core Entertainment's performance has hit a sour note as its big hit, the song-performance show, "American Idol," loses popularity.

Core relies heavily on the success of the long-running singing competition, which accounts for 40% of the New York-based media company's revenues.

American Idol's viewership declined by 23% during the show's 12th season, and the January premiere of its 13th season was down 22% from the previous season's level. Audience ratings had already fallen by 29% in 2012.

Ratings agency Standard & Poor's is concerned about these factors, and said it believes the television producer may need to refinance its debt absent a decrease in leverage or the production of another breakaway hit show.

Core also owns the copyrights to albums produced by American Idol finalists, produces dance-off show "So You Think You Can Dance," and co-owns the rights to the name, likeness and image of Elvis Presley and Muhammad Ali.

S&P put the company's corporate credit rating of B on CreditWatch with negative implications on March 31, citing increased competition, eroding revenues and high leverage.

However, the TV producer may still have time for a comeback. Core should have "adequate" liquidity thanks to $31 million in availability under its $35 million revolving credit facility due in 2016 and some cash on hand, S&P estimated.

Core doesn't have near-term debt maturities - its two other loans come due in 2017 and 2018 - but S&P warned that those loans face "refinancing risks" due to the company's negative operating trends. If American Idol's ratings continue to decline at a normal rate of 10% to 15%, S&P estimates that the company will lose at least a high-single-digit chunk of its revenues.

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