It is finally here: “Star Wars: The Force Awakens” has hit the big screen. Walt Disney Co. (NYSE: DIS) bought the Star Wars franchise from George Lucas for some $4 billion, and it is without a doubt the best steal ever in media mergers as, Disney is the one company that could milk Star Wars for the biggest dollars and cents out of any other company in the world.
Now we have a fresh report from Moody’s Investors Service saying that Disney’s release of “Star Wars: The Force Awakens” is credit positive. That may not be a credit rating upgrade by any stretch, but we simply do not recall seeing a movie release justify a corporate credit rating positive note from one of the top credit ratings agencies in years.
Moody’s believes that the Star Wars release positively affects the company’s credit, with the film expected to be a box-office mega hit like no other. Moody’s also noted that this should demonstrate that the 2012 acquisition will be highly lucrative.
Again, it is not a credit rating upgrade. Moody’s said on Friday:
Moody’s does not anticipate that Disney’s A2 senior unsecured debt rating, Prime-1 short term debt rating and stable outlook will be directly affected by the expected success of the Star Wars release, as we believe the company will sustain a constant leverage range between 1.5 and 2.0x (including Moody’s standard adjustments)… We expect the Star Wars IP to generate significant cash flows for Disney, but we do not anticipate any material de-leveraging as cash and additional financial flexibility will likely be utilized via distributions to shareholders.
However, the Star Wars franchise is uniquely multi-beneficial to Disney and clearly the evergreen intellectual property further diversifies and strengthens the company’s foundation alongside its most important franchises, such as its traditional characters like Mickey Mouse, its new characters like those in Frozen, its Marvel characters franchise and its Pixar CG animation franchise.
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