The firm says the pandemic "will materially weaken Disney's operating and credit profile over the near term."
Fitch Ratings has put The Walt Disney Company on credit watch, with a negative outlook, over concerns about how the Hollywood studio will weather the coronavirus outbreak in the near term.
Cutting the conglomerate's rating outlook from stable to negative, Fitch on Wednesday in a note said it expected "the coronavirus pandemic will materially weaken Disney's operating and credit profile over the near term (next two to three quarters)."
Fitch added Disney's businesses will "normalize gradually in step with the return of economic activity as the coronavirus threat diminishes. Fitch does not expect at this time that the short-term shock to Disney's business model will erode Disney's long-term credit quality reflected by the current 'A' IDR."
To reduce the impact of the COVID-19 virus, Disney this week said it will close all of its North American stores and the studio will also close Downtown Disney in Anaheim and Disney Springs in Orlando. Disney hotels in Walt Disney World and its Vero Beach Resort will also close by Friday.
At the same time, the ratings agency said efforts by Disney to reduce its debt load after acquiring assets from 21st Century Fox will fall short of earlier expectations from Wall Street investors and will put pressure on its current debt rating.
