Viacom Drops Blockbuster Split Plan28 Mar, 2001 By: Hive News
Viacom Inc. has given up on a long-stalled plan to split off its Blockbuster Inc. division, according to the Associated Press.
For the past year, Viacom said it was waiting for a recovery in Blockbuster's stock before going ahead with plans to split off theremaining 82.3% of the publicly-traded unit.
But a recovery in the business has led the company to reconsider the plan, Viacom spokeswoman Susan Duffy said Wednesday, confirming a story that appeared in the Wall Street Journal.
Viacom's new position will be formalized when it files an annual report with the Securities and Exchange Commission in the next few days, Duffy said.
Viacom purchased Blockbuster in 1994, and it was hoped that the video rental chain would provide a steady income to help offset the cost of the Paramount Communications acquisition that same year.
Blockbuster quickly turned into a troubled company as growth in the video rental business ground to a halt. It has since turned itself around.
Merrill Lynch expects Blockbuster to post a 10% increase in cash flow for its fourth quarter to $165 million on a revenue increase of 6% to $1.28 billion.