shares slipped 8% Monday on reports of a setback in parent
efforts to sell the movie rental chain.
Monday's editions of
The New York Times
reported that Viacom was leaning toward a spinoff of Blockbuster to shareholders after sale talks fell apart over pricing differences. That news sent the stock down $1.58 to $17.14 as investors concluded that a premium-fetching sale was less likely.
Media reports in recent months have indicated that Viacom was in talks to sell its controlling stake in Blockbuster to a group of private equity firms including Blackstone Group, Thomas H. Lee, Providence Equity Capital and the Quadrangle Group. The
reported that talks could resume but only at a lower price.
That said, Viacom President Mel Karmazin indicated in December that Viacom felt no pressure to sell Blockbuster, whose business continues to be threatened by DVD sales at electronics chains and discount retailers. "We don't need the cash," Karmazin said at Credit Suisse First Boston's Media and Telecom Week conference.
In fact, one alternative for Viacom regarding Blockbuster is "doing nothing," said Karmazin. That comment appeared to contradict -- or at least cloud -- Viacom Chairman Sumner Redstone's reported statement that Blockbuster was no longer considered a "core brand" for Viacom.
Viacom was up 7 cents to $40.37.