Moody's Downgrades BBC-Related Bonds, Cites Jimmy Savile Scandal Fallout
LONDON - Credit ratings agency Moody's has downgraded U.K. mortgage bonds tied to commercial real estate locations where the BBC is the sole tenant, citing in part fallout from the Jimmy Savile sex-abuse scandal, the Financial Times reported.
Moody’s cited "strategic uncertainty" at the public broadcaster following management turnover "in the wake of the Jimmy Savile affair" and the BBC's “ongoing challenge” of providing high-quality programming amid the need to manage costs. The agency also highlighted Moody’s recent downgrade of Britain's debt rating as influencing the mortgage bonds downgrade.
Moody’s also highlighted a lack of "any concrete plans regarding funding and governance of the BBC post-2016," according to the FT. Negotiations with the British government over a post-2016 renewal of the BBC’s license fee paid by taxpayers are expected to start next year. Some industry observers have wondered if the BBC’s negotiating position could be weakened following the Savile scandal.
Overall, Moody's downgraded three BBC-related bonds backed by a pool of loans on commercial real estate by one notch. The FT emphasized, though, that it was unlikely that the downgrade would have an impact on the ability to pay bond investors.
The BBC said it disagreed with the Moody's action and how the agency explained it in "publicity material" for investors. "The downgrade of the companies referenced was triggered by Moody’s overall downgrade of the U.K. and did not come from a review of the BBC’s financial position," it said. "The Savile-related events of recent months have had no significant impact on the BBC’s finances this year and are not anticipated to in the future."
Amid the sex-abuse scandal surrounding late former BBC host Savile, the broadcaster late last year lost director general George Entwistle, who had been in the post for less than two months. Industry veteran Tony Hall is scheduled to take over the BBC next month.