Blockbuster Entertainment Corp’s plan to merge with Viacom Inc does not impress Standard & Poor’s Corp, which has placed its $150m triple-B-minus senior debt rating on Creditwatch with negative implications. It says concern over continued escalation of the debt components of the Paramount Communications Corp offer suggests that a combined entity senior debt rating of double-B-plus may result from the emerging financial structure, but that Blockbuster’s cash flow and conservative capitalisation could help bolster the credit profile of a combined Paramount Viacom Blockbuster entity, and that business risks considerations that have restrained Blockbuster’s rating would be mitigated by the business diversity, media franchises and technology strengths of combination with Paramount and Viacom.
