Moody's Cuts Viacom's Credit Rating Due To Company's Weak Recovery

Moody Investors Service on Thursday cut Viacom Inc.'s long-term debt rating to Baa3, which is one notch from junk, from Baa2. The credit downgrade comes a day after the beleaguered company said it would cut its quarterly dividend in half to improve financial flexibility, and issued a profit warning for the fiscal fourth quarter that, at the time, was about 23.1% below estimates. Viacom's revised forecast is for earnings in the 65 cents to 70 cents range and the revised FactSet consensus is 77 cents. "Today's rating action reflects the continued weaker than anticipated rebound in the company's operating performance and cash flow contributions, and our expectation for higher near-term adjusted leverage which is well beyond levels commensurate with a Baa2 senior unsecured rating," Moody's analysts wrote in a release.