In the week when Disney slashed 4,000 jobs or 3% of its workforce, Viacom has ditched plans to sell video rental giant Blockbuster, after reporting improved business and a boost from DVD.
Blockbuster has struggled for several years and Viacom, which is also the parent of Paramount Pictures, MTV and the CBS television network, among others, had been considering selling off its 82% holding. But plans to sell off the business, which has its own stockmarket quote, had been hampered by market conditions which meant that Viacom was unlikely to achieve the $20 a share sale price it wanted.
Now however Viacom chairman Mel Karmazin says he is very excited about the business. "Blockbuster has been picking up market share and growing the business," said Karmazin. This is despite the collapsed video-on-demand joint venture with Enron Corp, which unravelled earlier this month. (Screen Daily March 12, 2001)
The big difference appears to be DVD. Blockbuster's chief executive, John Antioco said that DVD rentals were 10% of revenue last year and could be 20% or more of sales this year. Blockbuster has also grown at the expense of smaller businesses such as West Coast Video, which have run into financial difficulties.
Viacom said Blockbuster is expected to report EBITDA of $582m this year, compared with $535m last year, on revenue of $5.36bn (up from $4.96bn). Blockbuster shares yesterday rose from $13.24 to $14.10.