Moody's cautions media companies' shareholder-friendly moves

NEW YORK – North America media companies that ramp up shareholder initiatives to woo investors could be putting their credit quality at risk, according to Moody's Investors Service. In a special comment entitled ‘North American Media and Entertainment: An Arms Race: Limited Growth Spurs Rising Equity Returns Amid High Cash Levels’, Moody’s said that companies such as Shaw Communications and Time Warner Inc. paid dividends in 2011 that exceeded a third of their free cash flow. That means their credit quality is at risk if these high payout rates continue to trend upward without other credit improvements, unless risk related...