Fitch downgrades Viacom

Fitch Ratings said it downgraded Viacom, Inc.'s issuer default rating to BBB from BBB+.

The agency also said it downgraded the company's senior unsecured notes and debentures to BBB from BBB+ and affirmed its F2 short-term issuer default rating and commercial-paper ratings.

Included in the downgrades was the rating on the company’s senior unsecured bank facility due 2019 to BBB from BBB+.

The outlook remains negative.

The downgrades reflect the persistent weakening of Viacom's operating profile and the absence of tangible evidence that the strategies implemented by the company are recapturing positive operating momentum and reducing volatility, Fitch explained.

The expected rebound of Viacom's operating profile has taken longer than previously anticipated, the agency added.

The company plans to increase its programming investment and focus on developing more original programming across its cable network portfolio, and Fitch said it believes this is the appropriate strategy given the current operating environment.

The ratings also recognize the overhang created by the ongoing discord among Viacom's controlling shareholders, National Amusements, Inc. and NAI Entertainment Holdings LLC with Viacom's board of directors and senior management, the agency said.

The situation has elevated event risks attributable to Viacom's credit profile and created uncertainty about management's ability to execute on strategic initiatives necessary to strengthen the company's competitive position and operating profile, Fitch said.

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