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      Scope has completed a monitoring review for the ORF
      MONDAY, 08/07/2024 - Scope Ratings GmbH
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      Scope has completed a monitoring review for the ORF

      This periodic review has resulted in no rating action.

      Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or minimum every six months in the case of sovereign, sub-sovereign and supranational organisations.

      Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

      Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key ratings assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

      Scope completed the monitoring review for the Österreichischer Rundfunk Stiftung öffentlichen Rechts (ORF) (long-term local- and foreign-currency issuer and senior unsecured debt ratings: AA-/Stable; short-term local- and foreign-currency issuer ratings: S-1+/Stable) on 3 July 2024.

      This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

      For the updated rating report, please see here.

      Key rating factors

      The AA- rating assigned to the ORF is driven by ORF’s high integration with the Republic of Austria (AA+/Stable), given close strategic, operational, and financial ties. Scope acknowledges the ORF’s high strategic relevance given its public mandate. Market leadership, a high level of trust, national representation for federal states, and established production and distribution structures make substitutability of ORF very difficult, and the continued existence and sufficient financial means of ORF are thus of high public interest.

      The ORF relies on a financing model via ORF-levies from 2024, payable by households and businesses in Austria, which make up the majority of revenues. ORF-levies ensure a stable revenue base, enabling the ORF to fulfil its public mandate.

      Scope deems the change in the ORF’s financing model via the ORF-levy from 1 January 2024, from formerly ORF license fees, to be broadly credit neutral. However, annual revenue from the levy is projected to fall around EUR 32m (or 4.5% in 2024) below budgeted levels until the end of 2026, due to around 180,000 fewer paying households than projected by the Austrian Federal Ministry of Finance when setting the levy until the end of 2026. The ORF is working with the authorities to improve the robustness of the household register to partially close the revenue gap, although the majority of missing households are assumed to be permanent. In response to the revenue gap, the ORF plans to use a dedicated reserve of EUR 40m, in line with §31 section 22 of the ORF-G, and implement further measures to safeguard its cash and capital positions.

      Finally, the ratings take into account the ORF’s business and financial risk profiles, which Scope assesses as overall neutral. In addition to revenue underperformance due to lower-than-budgeted ORF-levies, main risks relate to i) continued pressure on advertisement revenues, especially for the TV segment and ii) longer-term risks relating to a dynamically changing usage of media, especially among younger viewers. Cost increases and the associated cost saving strategy of ORF are further challenges.

      The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the next 12 to 18 months.

      The ratings/Outlooks could be upgraded if, individually or collectively: i) the Republic of Austria’s ratings and/or Outlooks were upgraded; ii) there were legislative changes leading to significantly stronger financial and/or operational linkages with the federal government; and/or iii) the business and/or financial risk profile improved significantly.

      The ratings/Outlooks could be downgraded if, individually or collectively: i) the Republic of Austria’s ratings and/or Outlooks were downgraded; ii) there were legislative changes leading to significantly weaker financial and/or operational linkages with the federal government; and/or iii) the business and/or financial risk profile deteriorated significantly.
       
      The methodology applicable for the reviewed ratings and/or rating Outlooks (Government Related Entities Rating Methodology, 13 July 2023) is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
      This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
      Lead analyst Julian Zimmermann, Associate Director

      © 2024 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin.

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