WASHINGTON – Standard & Poor's revised its outlook to negative from stable on both District of Columbia bond issues for National Public Radio as well as on NPR.
S&P also assigned an AA- long-term rating and negative outlook to $67 million of district refunding revenue bonds scheduled to be sold for NPR on April 28.
NPR plans to use the bond proceeds to advance refund a portion of the $162.1 million of revenue bonds issued by the district in 2010. Those bonds were used to help finance the construction of a new $201 million headquarters for the nonprofit.
The district also issued $87.4 million of refunding revenue bonds in 2013 to finance the defeasance of a portion of the 2010 debt.
S&P attributed the negative outlook to financial resources that have failed to improve in recent years, adding that NPR's fiscal 2015 financial resources are "considerably weaker" than those in fiscal 2010.
The S&P report, released Thursday, found that NPR has a total of $169 million of debt as of September, which includes the 2010 and 2013 bonds as well as a $500,000 note.
"While NPR has improved its operating performance to levels approaching breakeven on a full accrual basis in fiscal 2015, the operating results are not strong enough, in our view, to offset the weak financial resources ratios at the current rating without substantial growth in the next year or two," analysts wrote in the report.
S&P credit analyst Charlene Butterfield said the rating agency would again consider lowering its rating if NPR "fails to grow its financial resources ratios compared with operations and debt, or if operating performance fails to reach breakeven levels on a full actual basis" over the next two years.
The report also said the credit rating agency could consider upgrading NPR's rating to stable over the next two years if the organization's financial resources ratios, compared with operations and debt, "grow substantially" and if operating results are maintained at fiscal 2015 levels or better.
"The outlook revision reflects our opinion of financial resources that have failed to improve during the past few years from levels that are very weak for the rating category," Butterfield said.
S&P analysts said they expect NPR's operations to improve in fiscal 2016 and going forward, due to its reported balanced budget and expectations for a moderate surplus on a budgetary basis. The AA- rating was based in part on NPR's brand name as well as a diminished full accrual operating deficit in fiscal 2015.
"The strong enterprise profile and achievement of a balanced budget offset increased pressures and risks in the media industry," analysts wrote.
NPR moved to its current 400,000-square-foot headquarters on North Capitol Street in April 2013. It previously had headquarters on Massachusetts Avenue.
NPR currently has 264 members across the U.S. that own and operate 920 stations. It reaches more than 26 million weekly listeners through a variety of platforms. As of September 2015, NPR had $79 million of total cash and investments, as well as $312 million of cash and investments held by the NPR Foundation. The organization relies heavily on listener donations to finance its operations.
Moody's Investor Services also assigned an A2 rating to the series 2016 bonds and downgraded NPR to A2 from A1. The credit agency also assigned NPR a stable outlook.
"The downgrade reflects NPR's reduced financial cushion and still relatively modest cash flow to navigate rapidly escalating competition," Moody's analysts wrote in an April 15 report.
NPR's more than $212 million operating revenue comes mainly from programming fees, gifts and corporate sponsorships, according to Moody's.
