Mediapro credit rating downgraded after missed LFP payment
Moody's, the global credit rating company, has downgraded Joye Media, the parent company of Mediapro, following the Spanish media rights and production agency's failure to make a scheduled payment to the LFP, the French soccer league.
Moody's has moved Joye Media down one notch from B3 to Caa1, which the ratings company describes as a "very high risk" of non-repayment of credits.
It is just four notches above default.
Furthermore, the outlook on the rating is 'negative', meaning another downgrade is more likely than not.
Victor Garcia Capdevila, a Moody's analyst, said the decision took into account the "missed payment to the French football league and the difficulty in making profitable the rights of French football with the number of current subscribers."
Mediapro's four-year deal covering the 2020-21 to 2023-24 cycle is worth €814 million ($964 million) per annum, but it did not make its second instalment payment of €172 million due on 5 October, citing the impact of the coronavirus pandemic.
That led the LFP to take out a bank loan to cover its next payment to clubs on 17 October, and the league has now referred the matter to the commercial court in Paris.
Jaume Roures, president of Mediapro, said at a news conference this week that the agency remains committed to the LFP contract, but wants the terms for season one to be amended to reflect the current economic situation.
Mediapro and the LFP are now going through a conciliation process, which is expected to last several weeks, and as a result the next due payment - €150 million on 5 December - is unlikely to be made.
Mediapro launched the Téléfoot channel to show Ligue 1 and Ligue 2. It is priced at €25.90 per month, and Mediapro had targeted around 3.5 million subscribers.
Roures said this week that Téléfoot has 600,000 subscribers, more than double what had been reported in France in recent weeks.
Capdevila said Mediapro's issues in France "are negative for the company’s reputation and could lead to lengthy legal proceedings and possible financial compensation payments, which risk further weakening its financial situation, already low due to the impact of the coronavirus pandemic."