NEW YORK--(BUSINESS WIRE)-- Viacom, Inc.'s (Viacom) announcement that it has increased its share buyback program by $6 billion, to $10 billion, has no impact on the company's 'BBB+' IDR or Stable Outlook, according to Fitch Ratings.

Management expects to repurchase $700 million of stock in fiscal first-quarter 2012 (1Q'12), leaving $6.8 billion under the newly increased authorization. The company stated that repurchases would be at least $2.5 billion in FY2012. However, given management's expectations that the program will be completed in approximately two years, Fitch believes either FY2012 repurchases will exceed this number, or FY2013 repurchases will be larger. While the pace of the repurchases is moderately faster than Fitch had previously anticipated, the company's EBITDA and free cash flow also exceeded Fitch's expectations. Fitch believes this repurchase activity is easily manageable within the current ratings given the company's free cash flow generation and total leverage.

Fitch estimates that Viacom's leverage was 1.7 times (x) at Sept. 30, 2011, below both Fitch's 2.25x target for the rating and the company's stated 2.0x target. Fitch estimates that under the company's 2.0x target, there is nearly $1.5 billion of incremental debt capacity. Additionally, Fitch expects Viacom's free cash flow will continue to exceed $1.5 billion annually. As a result, Fitch believes the company can easily manage the increased buyback program within its 'BBB+' ratings profile. In the event of pressured free cash flow or a large acquisition, Fitch believes Viacom would reduce share repurchase activity to remain within its leverage target.

Fitch currently rates Viacom as follows:

-- Long-term Issuer Default Rating (IDR) at 'BBB+';

-- Senior unsecured notes and debentures at 'BBB+';

-- Senior unsecured bank facility due 2013 at 'BBB+';

-- Short-term IDR at 'F2';

-- Commercial Paper at 'F2'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

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KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Professional Services  Finance

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