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Announcement:

Moody's says the CBS (Baa3) and Comcast (Baa1) comprehensive, ten-year retransmission agreement has long-term implications, but no near-term ratings impact

Global Credit Research - 06 Aug 2010

New York, August 06, 2010 -- Moody's says the CBS Corporation (Baa3) and Comcast Corporation (Baa1) comprehensive, ten-year agreement that provides for retransmission consent of CBS Television Stations until the year 2020 has long-term implications, but no near-term ratings impact. The long-term, wide-ranging pact also includes carriage of the full suite of Showtime Networks, Comcast's launch of the Smithsonian Channel and expanded distribution of CBS College Sports. In addition, Comcast will have greatly expanded on-demand access to CBS and SHOWTIME content via their cable and online platforms.

Moody's does not anticipate the agreement to have any material credit rating implications, but the agreement is notable in many ways. In Moody's view, the agreement is much longer than the customary three to five years and it was concluded over a year before the existing agreements expire which will ensure no interruption of broadcasting among CBS stations and cable networks on Comcast's systems, the largest cable company in the US. "This isn't necessarily unusual, except for the fact that there have been more of these negotiations occurring this year as compared to the past, with evidence of brinkmanship and threats to cut off distribution or withhold programming," stated Neil Begley, a Moody's Investors Service Senior Vice President. "Concerns have been building over evolving viewer habits and technological advancements, both which could be disruptive to the current economic model for pay TV distribution. Therefore, the length of this transaction underscores the importance of the current ecosystem for producing, distributing and funding of popular television programming," stated Begley.

In Moody's view, with the agreement CBS attains meaningful long-term carriage with built in contractual escalators for its stations and networks. This helps to ensure stability and predictability of non-advertising revenues and gradually reducing exposure to economic cycles. CBS also retains flexibility with regard to Internet streaming rights as the agreement does not provide exclusivity to Comcast in its markets.

For Comcast, Moody's believes that the agreement also provides a level of certainty and predictability for some of its retransmission and carriage fee costs, which have grown at a pace well in excess of inflation. Nevertheless, the agreement will continue to increase costs for Comcast, which we believe may become increasingly challenging to pass along to subscribers because of competition as the agreement ages. Positively, as there is already significant competition among pay TV providers today, avoiding retransmission negotiation battles which are disruptive for Comcast's customers for very important major network programming, we believe the contract helps to build on advances in consumer satisfaction and churn reduction. In addition, as Comcast awaits regulatory approval for its acquisition of a controlling interest in NBC Universal, Moody's believes that CBS is highly unlikely to object to the approval now that it has secured this new long-term contract which will define the two companies' relationship for the next decade. "Comcast also is expected to gain some rights to CBS product for its growing video-on-demand product, which we view as crucial to the long-term stability of the current pay-TV business model," stated Begley.

The last rating action for Comcast was on February 24, 2010 when Moody's assigned a Baa1 rating to the company's new senior unsecured notes issuance.

The last rating action for CBS was on March 30, 2010 when Moody's assigned a Baa3 rating to CBS's new senior unsecured notes issuance.

The principal methodology used in rating Comcast was Moody's Global Cable Television Industry Methodology, published in July 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologiesand factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

The principal methodology used in rating CBS was Moody's Global Diversified Media Industry rating methodology, published in November 2007 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Othermethodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Comcast Corporation, with its headquarters in Philadelphia, Pennsylvania, is a leading provider of video, high-speed Internet and phoneservices to residential and commercial customers. The company also owns and operates national cable television programming networks, Internet businesses, professionalsports teams, and a large, multipurpose arena.

CBS Corporation with its headquarters in New York is among the world's largest media companies with revenues from five business segments: Entertainment (includes CBS Television Network, CBS Television Studios, CBS Television Distribution, CBS Interactive and CBS Films) (54% of 2009 revenues), Cable Networks (10%), Publishing (6%), Local Broadcasting (18%) and Outdoor (13%).

New York
Neil Begley
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Richard J. Lane
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
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Moody's says the CBS (Baa3) and Comcast (Baa1) comprehensive, ten-year retransmission agreement has long-term implications, but no near-term ratings impact
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