ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Wednesday, April 23, 1997 TAG: 9704230062
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: NEW YORK
SOURCE: ASSOCIATED PRESS
Viacom's Class B shares fell $3.75 each after word that Blockbuster's chairman was leaving.
Videos aren't exactly jumping off the rental shelves, but entertainment giant Viacom Inc. hopes special shares of Blockbuster Entertainment will be become a hit with investors.
The parent of MTV and Paramount Pictures said Tuesday it will sell new stock to the public that tracks the performance of its Blockbuster unit and hire a new executive to run the show. Wall Street blanched, however, on the news that Blockbuster chairman Bill Fields is leaving.
Viacom's Class B shares fell $3.75 each to close at $27.25 on the American Stock Exchange.
Wall Street had been curious for some time about what Viacom chairman Sumner Redstone would do about Blockbuster, whose growth has slowed from its heyday in the late 1980s and early 1990s.
``Blockbuster has largely been the taint at Viacom,'' said Jill Krutick, an entertainment analyst at Smith Barney.
The video game rental business has fallen off, a segment that had produced fast growth for the big chain. Blockbuster, sold to Viacom in 1994, had been one of the nation's fastest-growing companies.
Redstone's purchase of Blockbuster revolved around his bid for Paramount Communications. He wanted to get into the movie business, but Viacom did not generate enough cash to finance the deal. So he bought Blockbuster for $8 billion in stock and was able to buy Paramount from a larger base.
When Redstone hired Fields away from Wal-Mart last year to turn the video renter around, it was considered something of a coup. Fields was credited with leading Wal-Mart into video retailing and moving the discounter into the world's biggest seller of videos.
``He was represented as the savior, and he's fallen on his sword,'' said Dennis McAlpine, a media and entertainment analyst at Josephthal, Lyon & Ross.
Viacom said growth is expected to resume in the second half of the year.
LENGTH: Short : 48 linesby CNB