S&P cuts Blockbuster rating

New York City Standard & Poor's Ratings Services downgraded video rental chain Blockbuster's corporate credit rating on Thursday, saying there is "substantial doubt" about the company's ability to continue operating.

The ratings agency cut its corporate credit rating on Blockbuster to 'CC' from 'CCC' and said its outlook is negative.

The move comes just days after Blockbuster warned that it may have to file for Chapter 11 bankruptcy court protection. Blockbuster is grappling with a heavy debt load and stiff competition from DVD-by-mail company Netflix and DVD vending machines operated by Coinstar.

S&P didn't change Blockbuster's secured and subordinated debt ratings.

S&P said its negative outlook indicates Blockbuster is "highly vulnerable to default."

Blockbuster said in a regulatory filing late Tuesday that it was suffering "significant liquidity constraints" and could file for bankruptcy protection if its creditors don't restructure a big chunk of its debt or if its business continued to deteriorate.