Viacom's downgraded

Make the humiliation stop!

Goldman Sachs downgraded Viacom on Monday to “neutral” from “buy” and yanked the company from its Americas Investment List, replacing it with News Corp. and slapping a buy recommendation on Rupert Murdoch’s company instead.

Viacom chief Sumner Redstone can’t be pleased.

Redstone, in conference calls with Wall Street, with the press, and very publicly on “Charlie Rose,” has lamented Viacom’s loss of MySpace to News Corp, calling it “a humiliating experience.”

He hates to lose to Murdoch. MySpace has become the pillar of News Corp.’s Internet strategy and, Redstone has calculated, is worth three times what Rupe paid.

Goldman analyst Anthony Noto cited the Fox Interactive Media division as one reason shares of Murdoch’s conglom have more upside than Viacom’s. Others include higher affiliate fees for Fox News Channel (Cablevision agreed Monday to triple it), a possible spinoff of DirecTV and growing profits at Sky Italia.

“We maintain a positive view of Viacom but see more upside in News Corp.,” the analyst wrote in a note to investors.

Noto said News Corp. shares could rise 20% from his price target of $25 — with Viacom’s upside limited to 8% of his $42 price target.

He lowered his revenue and cash flow projections for Viacom on slower ad sales at the company’s cable nets.

Still, he’s rather upbeat on Paramount, saying a turnaround there “lacks visibility” but could come faster than anticipated and offers investors more opportunity than risk.

He sees the studio generating $230 million in cash flow this year and $260 million next year. The 2007 figure may be conservative, he said, as Par is set to rake in distribution fees from DreamWorks Animation pics “Shrek 3″ and “Bee Movie.”

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