Fitch: Media, entertainment sector liquidity good

In a report on the sector, Fitch Ratings looked at internal sources and holdings of cash to measure how well a company can weather an environment where banks are stingy with loans.

"Although facing both cyclical and secular threats, the media and entertainment industry is characterized by relatively predictable revenue streams and high margins," Fitch said.

An exception is newspaper publisher Tribune Co., where a 10 percent drop in operating cash flow "could put them at risk of breaching" lenders' debt ratio requirements, Fitch said. The company went private last year in a complex deal led by real estate investor Sam Zell.

The report said media and entertainment companies have "generally healthy" liquidity, with $18.1 billion in free cash flow and $21 billion in cash on the balance sheet over the past 12 months.

If the sector continues to generate the same level of free cash flow going forward, Fitch said the companies have more than enough money to meet debt coming due until 2010.

Fitch said $6.2 billion in debt is due this year, $10.2 billion next year and $12.4 billion in 2010. The amounts include commercial paper borrowings.

The biggest companies in the sector, including The Walt Disney Co., News Corp., Time Warner Inc., and Viacom Inc., are best able to weather the credit tightening.

Fitch pointed to these companies' "strong and stable" operating liquidity, diversified sources of revenue not related to advertising, "meaningful amounts" of cash on hand, access to revolving lines of credit and debt whose maturities are farther out.

Media and entertainment companies also didn't borrow significantly from Lehman Bros., the failed investment bank.