Cox Enterprises Inc.

The stable outlook reflects good revenue visibility from CEI's cable unit, coupled with our expectation that the company will maintain a moderate financial policy such that debt to EBITDA remains in the mid-2x area over the next two to three years. Although unlikely over the next two years, we could lower the ratings if debt-financed acquisitions cause leverage to rise above 3x on a sustained basis or increase its exposure to businesses with less favorable risk characteristics. While unlikely over the next two years given the maturity and secular trends of the cable unit, coupled with our less favorable business risk assessments of the company's non-cable segments, we could raise the ratings if CEI reduces leverage to below 2x on

...We view Cox Enterprise Inc.'s (CEI's) proposed sale of its broadcast TV and radio stations to Apollo favorably. We believe the broadcasting business lacked the scale necessary to compete effectively and did not provide any meaningful synergies to its cable unit, while the radio business was in secular decline. By removing them, CEI management can sharpen its focus on the growing cable and auto businesses. Furthermore, we expect the company to pay down debt with proceeds in a manner that is at least leverage neutral. We expect high-margin broadband revenue will continue to grow at a healthy rate for the next three years, driven by a combination of price increases and subscriber growth. As broadband becomes increasingly important in the lives of consumers, we believe demand for faster internet to stream video on multiple devices will allow CEI to raise prices as customers migrate to faster speed tiers. We also believe CEI will continue building its subscriber base from a combination of increasing...

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