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S&P says Viacom's leadership struggle could hinder financial turnaround

Viacom-Chairman Sumner Redstone (L) and Viacom CEO Philippe Dauman
Peter Kramer | Getty Images
Viacom-Chairman Sumner Redstone (L) and Viacom CEO Philippe Dauman

Fighting among the leadership may threaten Viacom's ability to improve its fiscal performance, S&P Global Ratings said Tuesday as it revised its ratings outlook to negative.

The ongoing dispute between Viacom's board and management could "adversely affect" the media company's financial turnaround, S&P Global Ratings said in a statement Tuesday, though it affirmed Viacom's BBB- corporate credit rating. The negative revision, down from stable, reflects increased doubts that Viacom can maintain its leverage threshold until September 2017, the statement said.

"Viacom's operating performance across both its cable network and filmed entertainment divisions continues to significantly lag its peers," S&P's credit analysts wrote.

It comes as Viacom has chopped down its third-quarter earnings guidance, as controlling shareholder Sumner Redstone tries to oust CEO Philippe Dauman and four other directors from Viacom's board. It's the latest in a series of nasty moves as National Amusements' Redstone and Dauman have have brawled over Redstone's competence and the sale of a minority stake in Paramount Pictures.