Level 2 Issues: WOW! Downgraded Again by S&P

Trouble is brewing for Tier 2 cable operators.

Just over a week after Downgrade of Cable One for the second time this year, S&B Global revised WideOpenWest (WOW!) from “B” to “B-minus”.

“WOW! has limited liquidity and has exhausted its revolving credit facility,” the rating agency wrote in a statement published late last week.

“From 30 June 2024 [WOW!] had approximately $21 million of cash on the balance sheet but no availability under its $250 million revolving credit facility due in December 2026,” S&P added. “In the second quarter of 2024, the company reported near-breakeven free operating cash flow (FOCF), primarily due to a significant reduction in capital expenditures for expansion, which we believe will impact WOW!'s longer-term competitive position.”

The move followed a further downgrade by S&P for WOW! in May from “B-plus” to “B”.

Also in May, WOW! receive a cash compensation offer by DigitalBridge Investments LLC and “various Crestview entities,” with the private equity interests proposing to acquire all outstanding WOW! shares not already owned by Crestview for $4.80 per share.

Like Ted Hearns Guidelines Substack noted on Monday: “WOW! CEO Teresa Elder has not provided an update on the offering, saying only that a committee of the board is looking into it.”

WOW! lost 4,700 broadband customers in the second quarter and is not the only company with problems at Level 2.

On August 14, S&P downgraded Cable One to negative from stable after the Phoenix-based cable operator lost 8,900 high-speed internet customers in the second quarter.

“We believe Cable One's business prospects have deteriorated due to increasing competition from fiber-to-the-home (FTTH) and fixed wireless access (FWA) providers,” S&P said. “As a result, we have lowered our rating downgrade threshold to 4x from 4.25x.”

Level 2 Issues: WOW! Downgraded Again by S&P

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