Fitch Rates NBCUniversal Enterprise, Inc. Commercial Paper 'F2'

CHICAGO--()--Fitch Ratings has assigned an 'F-2' Short-term Issuer Default Rating and Commercial Paper rating to NBCUniversal Enterprise, Inc.'s (NBCUE) $1.35 billion commercial paper program. NBCUE is an indirect, consolidated subsidiary of Comcast Corporation whose primary assets are its common and preferred ownership interests in NBCUniversal, LLC (the parent company of NBCUniversal Media, LLC). NBCUE had approximately $5.975 billion of debt outstanding including $725 million of preferred stock.

KEY RATING DRIVERS

--NBCUE's commercial paper program is guaranteed by Comcast and the cable guarantors included in the company's cross guaranty structure;

--NBCUE's existing $1.35 billion senior unsecured revolver will serve as a liquidity back-up for outstanding commercial paper balances.

--Fitch regards Comcast's sources of internally generated liquidity as strong.

--Fitch believes Comcast's strong operating profile and solid free cash flow metrics afford the company a high degree of financial flexibility at the current rating category.

Comcast's liquidity position and overall financial flexibility are strong owing to Fitch's expectation that the company will continue to generate material amounts of free cash flow and represents, along with the Comcast guaranty, a key rating consideration supporting NBCUE's short-term rating. Fitch believes the cash flows NBCUE generates through its investment in NBCUniversal LLC provide more than adequate coverage of ongoing cash requirements related to debt service, dividends on its preferred stock and income taxes.

The consolidated liquidity position is further supported by cash on hand (which totaled $1.7 billion on a consolidated basis as of Dec. 31, 2013) and $5.7 billion of collective available borrowing capacity (as of Sept. 30, 2013) from Comcast's two revolving credit facilities. Commitments under Comcast's $6.25 billion revolver will expire during June 2017 while the commitments related to NBCUniversal Enterprise's $1.35 billion revolver expire during March 2018.

Comcast's debt maturity profile is well laddered and within Fitch's free cash flow expectation for the company. Maturities total approximately $1.9 billion during 2014 (including $900 million at NBCUniversal Media) excluding outstanding commercial paper followed by $3.4 billion during 2015.

Fitch believes Comcast's strong operating profile and solid free cash flow metrics afford the company a high degree of financial flexibility at the current rating category. Comcast generated approximately $5.6 billion of free cash flow (defined as cash flow from operations less capital expenditures and dividends), marking a fall off compared with $7.5 billion of FCF generated during the year ended 2012. Higher EBITDA generation during 2013 was offset by elevated capital expenditures, significantly higher cash taxes, increased dividend payments and cash requirements associated with the retirement of certain pension obligations and trade receivable programs. Going forward Fitch anticipates that the company will consistently generate consolidated free cash flow in excess of $7 billion.

In Fitch's estimation, the company maintains an appropriate balance between returning capital to shareholders, in the form of dividends and share repurchases, repaying debt, and investing in the strategic needs of its business. However Fitch's expectation that shareholder returns as a percentage of pre-dividend cash flow will increase over the medium term is incorporated into the ratings. Comcast's board of directors authorized a $7.5 billion share repurchase program and increased the company's dividend 15.4% to $0.90 per share on an annualized basis. The company's management indicated that share repurchases should total $3 billion during 2014. Cash returned to shareholders (dividends plus buybacks) totaled $4 billion or approximately 52% of cash flow before dividends during year end 2013.

RATING SENSITIVITIES

A positive rating action, including a potential upgrade of Comcast's short-term ratings, would likely coincide with Comcast achieving and committing to a financial policy consistent with an 'A' rating including maintaining its leverage below 1.5x on a sustained basis. Comcast would need to demonstrate that its operating profile will not materially decline in the face of competition and less than robust housing and employment conditions.

Negative rating actions would likely coincide with discretionary actions of Comcast's management including, but not limited to, the company adopting a more aggressive financial strategy or event-driven merger and acquisition activity, that drive leverage beyond 2.5x in the absence of a credible deleveraging plan.

Fitch currently rates Comcast and its subsidiaries as follows:

Comcast Corporation

--IDR 'A-';

--Senior unsecured debt 'A-';

--$6.25 billion revolving bank facility (co-borrower with Comcast Cable Communications LLC) 'A-'.

Comcast Holdings Corporation

--IDR 'A-';

--Subordinated exchangeable notes 'BBB'.

Comcast Cable Communications, LLC

--IDR 'A-';

--Senior unsecured debt 'A-';

--$6.25 billion revolving bank facility (co-borrower with Comcast) 'A-'.

Comcast Cable Holdings, LLC

--IDR 'A-';

--Senior unsecured debt 'A-'.

Comcast MO Group, Inc.

--IDR 'A-';

--Senior unsecured debt 'A-'.

Comcast MO of Delaware, LLC

--IDR 'A-';

NBC Universal Media, LLC

--IDR 'A-';

--Senior unsecured debt 'A-'.

NBCUniversal Enterprise, Inc.

--IDR 'A-';

--Senior unsecured debt 'A-';

--$1.35 billion revolving bank facility 'A-';

--Series A preferred stock 'BBB'.

Fitch has assigned the following rating:

NBCUniversal Enterprise, Inc.

--Short-term IDR 'F2';

--Commercial Paper 'F2'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 5, 2013);

--'Rating Telecom Companies' (Aug. 9, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Effective from 8 August 2012 - 5 August 2013

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Rating Telecom Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682323

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=819834

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Contacts

Fitch Ratings
Primary Analyst
David Peterson, +1-312-368-3177
Senior Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
John Culver, CFA, +1-312-368-3216
Senior Director
or
Committee Chairperson
Mike Weaver, +1-312-368-3156
Managing Director
or
Media Relations
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
David Peterson, +1-312-368-3177
Senior Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
John Culver, CFA, +1-312-368-3216
Senior Director
or
Committee Chairperson
Mike Weaver, +1-312-368-3156
Managing Director
or
Media Relations
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com