Blockbuster seeks a Viacom asset


To raise its investment in Viacom Inc.'s battle for Paramount Communications Inc., Blockbuster Entertainment Co. is said to be seeking a Viacom asset as well as better terms, according to several executives close to Blockbuster.

Although it was unclear yesterday whether a revised deal between Viacom and its equity investor was imminent, many analysts said they expected Viacom's chairman, Sumner M. Redstone, to make another bid before Jan. 7.

That is the deadline the Paramount board has set for Viacom to top the cash-and-stock offer by QVC Network Inc. that is worth about $10 billion. Viacom needs $700 million more. So far, Blockbuster has invested $600 million.

Craig Bibb, an analyst who follows Blockbuster for Paine Webber, said it has sought an asset it could use to aid the growth of its own businesses. Gregory Fairbanks, the chief financial officer at Blockbuster, based in Fort Lauderdale, Fla., did not return telephone calls yesterday, and people close to Viacom declined to comment.

In addition, Blockbuster and Viacom's other equity partner, Nynex Corp., are reportedly seeking to renegotiate existing agreements that give them stock that is convertible at $70 into shares of Viacom class B nonvoting stock.

Viacom's class B stock has fallen since those deals were struck in September and would undoubtedly fall still more if it won its battle for Paramount. Yesterday, Viacom's class B stock closed at $45.25 a share, down $1.25, on the New York Stock Exchange.

One person with knowledge of the negotiations with Blockbuster and Nynex said Viacom may be considering a deal in which it lowers the stock's conversion price to about $60. But it was not clear precisely what terms Blockbuster and Nynex were seeking.

Blockbuster has not publicly indicated what asset it may seek, but Mr. Bibb and others noted that Blockbuster owns 70 percent of Spelling Entertainment, whose holdings include the pre-1973 NBC and ABC television libraries. Viacom owns the pre-1973 television library of CBS.

Several analysts said Blockbuster could cut Spelling's over head, for example, by combining the libraries. Spelling sells reruns of the series it owns to TV stations. Viacom uses some CBS series on Nick at Night, its cable service.

People with knowledge of Blockbuster did not rule out the possibility of a joint venture with Viacom rather than a direct sale.

As the talks between Viacom and Blockbuster continued, the gap remained relatively narrow between the value of Viacom's bid for Paramount and that of QVC.

Viacom's bid was worth roughly $78.62 a share, compared with $82.67 a share for QVC's. Still, QVC's bid has more cash and is generally considered more valuable. It is up to Viacom to match, or better, QVC's cash component.

There have been reports of dissension among Nynex's top executives about whether to make a larger investment in Viacom. Nynex's vice chairman, Fred Salerno, is said to champion the expansion into the entertainment industry, while some board members have reportedly been unhappy about it.

But someone close to Nynex reiterated yesterday that the board is pleased with its new role in entertainment. But this person stopped short of saying that Nynex would put up more money.

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