Moody's cuts Viacom to Baa2

Moody's Investors Service said it downgraded Viacom Inc.'s senior unsecured ratings to Baa2 from Baa1 and affirmed the short-term rating at P-2.

The outlook is stable.

Moody's said the downgrade comes at the heels of Viacom's announced plan to accelerate its share repurchase program and finance the plan by increasing debt and raising its leverage targets to 2.75-3.x from its previous target of 2x.

The higher leverage target exceeds the agency's comfort range for the Baa1 rating and is commensurate with a level of financial risk for which a Baa2 rating is more appropriate.

The reversal of management's previous commitment to a Baa1 rating, and the volatility of that commitment over the past five years relative to its peers, is a greater cause of concern for its credit profile in the long-term and will constrain any upward momentum, at least under the current management team, the agency said.

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