Moody’s Says Viacom Unlikely to Retain Rating

Turnaround in viewership, advertising will take longer than anticipated
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Moody’s Investors Service said that Viacom is unlikely to retain the current Baa2 rating on its debt unless it reduces its dividend or gets new cash by exercising strategic alternatives, such as the sale of an equity stake in its Paramount movie studio.

Viacom reports earnings this week and previously said its profit will be sharply lower than a year ago because of a poor performance by the latest Teenage Mutant Ninja Turtles movie, lower ad revenue and the failure to renew an SVOD rights deal.

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Moody’s, in a report dated Aug. 1, said a turnaround at Viacom could take longer than it previously anticipated. That will hurt financial flexibility and Viacom’s ability to reduce debt.

“Due to its young demographic, continued weakness in viewer ratings and lack of compelling and competitive programming, we believe Viacom is increasingly vulnerable to the ongoing transformation in the traditional media landscape,” Moody’s said.

Viacom is also under scrutiny because of the ongoing battle between controlling shareholder Sumner Redstone and CEO Philippe Dauman.

Read more at broadcastingcable.com.

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