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VIACOM 'BBB-/BB+' SENIOR/SUBORDINATED RATINGS MAINTAINED ON FITCHALERT EVOLVING -- FITCH FINANCIAL WIRE --

 NEW YORK, Jan. 10 /PRNewswire/ -- Viacom International Inc.'s $450 million 'BB+' subordinated debt and $800 million 'BBB-/BB+' senior/subordinated shelf registrations are maintained on FitchAlert evolving, which means ratings may be raised or lowered. The action is in response to continued uncertainty over the company's ultimate capital structure and credit profile in light of its announced merger with Blockbuster Entertainment Corp. and the ongoing bidding for Paramount Communications Inc. Key to any rating change is the final outcome of Viacom's proposed mergers with both Blockbuster and Paramount, and the amount of debt utilized by Viacom to accomplish these transactions.
 On Jan. 7, Viacom announced it intends to merge with Blockbuster in a stock-for-stock transaction valued at $8.4 billion. The transaction is expected to close in the first half of 1994 and does not depend on Viacom's successful bid for Paramount. In conjunction with this announcement, Viacom increased the cash portion of its bid for Paramount to $105 per share from $85 per share. The additional cash used to support this increased bid was obtained through the sale of equity to Blockbuster valued at $1.25 billion.
 An upgrade could result because the combined Viacom/Blockbuster entity (excluding Paramount) would have higher coverage and lower leverage than Viacom alone. Pro forma for this transaction, the combined entity will have debt-to-earnings before interest, taxes, depreciation and amortization (EBITDA) of 1.7 times (x), and EBITDA-to- cash interest and preferred dividends of 8.2x.
 An upgrade could also result for the Viacom/Blockbuster/Paramount entity. While it is still uncertain who will ultimately acquire Paramount, as well as what the final structure of the winning bid will be, further equity contributions from current and potential participants supporting Viacom's initiative could maintain or improve the credit profile of Viacom/Blockbuster/Paramount. Any upgrade would also consider the combined entity's financial policy going forward, specifically whether or not debtholder protection measures remain above Viacom's existing levels.
 A ratings downgrade could result if Viacom/Blockbuster acquires Paramount using fixed-income securities beyond what is currently proposed. The financial burden placed on the combined entity could result in debtholder protection measures at levels below investment grade. Pro forma for the existing bid, the combined Viacom/Blockbuster/Paramount entity would have debt-to-EBITDA of 5.2x and EBITDA-to-cash interest and dividends of 2.9x. These levels are consistent with a low investment grade rating.
 If Viacom does not acquire Paramount, a downgrade could still occur if a rival bid for Blockbuster forces Viacom to abandon its stock-for- stock offer and use debt to purchase Blockbuster's shares. For a downgrade to occur, however, a significant amount of debt would have to be employed.
 -0- 1/10/94
 /CONTACT: Stuart M. Rossmiller 212-908-0639 or Keith B. Foley, 212-908-0572, both of Fitch/
 (VIA)


CO: Viacom International Inc. ST: New York IN: ENT SU: RTG

SP -- NY080 -- 0935 01/10/94 14:23 EST
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Publication:PR Newswire
Date:Jan 10, 1994
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