Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 30, 1994 TAG: 9409300054
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
SOURCE: Associated Press
DATELINE: FORT LAUDERDALE, FLA. LENGTH: Medium
The deal gives Viacom an important distribution tool for its huge library of films, TV shows, video games and other products and an ally in its ambition to become a global powerhouse.
It adds the popular Blockbuster name to Viacom's lineup of familiar brands like the MTV cable network, Paramount Pictures and Simon & Schuster books.
Viacom joins the upper tier of media-entertainment conglomerates. The industry's largest is Time Warner Inc., with $14.5 billion in revenue last year. Viacom projects its combined revenue will surpass $12 billion in 1995.
Wayne Huizenga, who built Blockbuster from a tiny retailer in Texas in 1987 into the industry's largest home video outlet, dabbed his eyes after the vote to become part of Viacom.
``Is today a sad day?'' Huizenga asked early in his presentation. ``Yes, of course it is.''
But Huizenga supported the merger. ``We all know that technology will threaten our home video business one day. As new delivery systems began to emerge, the stock market would have penalized our stock,'' he said.
The merger was approved with about 58 percent of shares backing the deal, including key Blockbuster managers' 22 percent stake pledged ahead of time.
Viacom's vote was assured because its chairman, Sumner Redstone, controlled 85 percent of its voting stock. He will have 62 percent of the voting power in the combined company.
Based on Wednesday's closing price, Blockbuster said the merger was worth $30 per Blockbuster share. With nearly 266 million shares outstanding, that made the value of the deal about $8 billion.
The merger agreement was announced in January but nearly collapsed by March as the stock in both companies sank. A recovery in stock prices put the deal back on track by late August.
The final value of the deal to Blockbuster shareholders was about $400 million less than it was said to be worth in early January.
For Viacom, the merger was its second major acquisition in less than a year. In March, Viacom prevailed after a five-month bidding war against home shopping channel operator QVC Inc. for Paramount Communications Inc.
The deal is worth more than $325 million to Huizenga, who plans to stay with Viacom for six months to a year.
Blockbuster will be folded into one of five Viacom divisions, Blockbuster Entertainment Group.
The Blockbuster group will include 4,500 video, music and Discovery Zone stores, assume Viacom's payroll duties and gain control of Showtime and Paramount's five theme parks.
Other Viacom divisions cover films and programming, including Paramount, Spelling and Top 10 shows ``Frasier'' and ``Roseanne,'' cable networks such as MTV and Showtime, 12 television and 11 radio stations, and publishing, including Simon & Schuster, Prentice Hall and Macmillan.
Blockbuster is building a music store and Discovery Zone in Roanoke County.
by CNB