The Weather Channel faces “severe operational and credit ramifications” if it can’t reach a deal with DirecTV to bring it back to the satellite company’s 20M subscribers, Moody’s Investors Service says today. Weather Channel DirecTVThe channel went dark this week on the No. 1 satellite service. The bond rating firm isn’t worried yet, saying that “there is a good chance that both parties will eventually renew the contract in order to avoid customer dissatisfaction and churn.” But TWC had better watch out. Its debt burden sharply increased last year when it borrowed $600M to pay a dividend to its owners — NBCUniversal, Bain Capital Partners, and Blackstone Management Partners. Moody’s said at the time that the borrowing seemed to indicate that “NBCU is comfortable with high leverage at [TWC], and signals that it does not view [TWC] as a strategic core-asset, but as an opportunistic investment.” Although it said that TWC generates enough cash to pay down the debt quickly, it expected the company to “either make acquisitions or build capacity for future dividend payments.” That’s why the DirecTV dispute is worrisome. Revenues from TV ad sales and distributor fees account for as much as 60% of TWC’s sales, Moody’s estimates — and without DirecTV the top line number could decline “in the mid single to low double digit range.” That could trouble debt owners: TWC is “weakly positioned” in Moody’s rating of B1, which indicates its belief that its debt too risky for many investors.

TWC also can’t afford to take a big fee cut from DirecTV. That might embolden other distributors to demand reductions. Moody’s says that DirecTV has an incentive to settle because TWC’s weather info “isn’t fully replicated elsewhere on TV” and “does provide valuable public service programming during periods of regional extreme weather events.” Earlier this week Standard & Poor’s said that it also expects DirecTV and TWC to settle. But it, too, notes that “how the dispute is ultimately resolved could have longer-term implications for our ratings.” Calling weather news “commodity content,” it says that if  TWC accepts too little then “Successive waves of renewals could witness increasing resistance–or outright cancellation–by cable operators when faced with demands by networks offering easily substitutable programming.”

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