Randomly Noted

Today, media company Hearst Corp. agreed to increase its stake in debt rating agency Fitch Group. This comes just a couple days after Warren Buffett cut his stake in rival Moody’s Corp. What’s it all about? We know, from a recent Buffett statement, that he thinks the credit crunch weakened rating agencies by exposing their failure to accurately and presciently rate toxic debt. Hence, his decision to trim his Moody’s stake to nearly 17% from just over 20% was interesting but not surprising. Moreover, at least one analyst has said Buffett may have simply adjusted his Moody’s holding for fairly mundane reasons, such as to raise a bit of cash or eliminate a 20% ownership regulatory trigger point. Hearst’s move gives us more to chew on. Granted, the publisher already owned 20% of Fitch, but to increase its exposure by another 20% suggests it has something on its mind. A colleague says Hearst may see an opportunity to build up Fitch – long the No. 3 credit ratings player after Moody’s and Standard & Poor’s – since the latter two have taken the brunt of the public beating during the economic crisis. Owning more Fitch could enhance Hearst’s efforts to diversify away from traditional ad-based revenue souces (newspapers, magazines, TV) and position it to compete more directly against McGraw-Hill Cos., S&P’s owner. Then again, Fitch Ratings’ revenue fell more than 10% in the nine months to June 30. compared with the year-earlier period. It’s worth noting that Hearst bought the additional 20% from France’s Fimalac SA, whose Fitch stake now falls to 60%. Fimalac says it envisions selling another 10% to Hearst down the road, adding that the two companies always envisioned a 50-50 Fitch ownership.