Blockbuster and Viacom Merge in $8.4-Billion Deal

Strategic Insights -

Fort Lauderdale, Fla. stockholders approved a merger between Blockbuster Entertainment Corp. and Viacom Inc., creating a massive media entertainment empire. Blockbuster chairman Wayne Huizenga, wiping away tears, cited the necessity of the deal to eliminate risks posed by emerging technology that could make home video rentals obsolete. The merger combines Blockbuster's video rental chain with Viacom's diverse holdings, including MTV, Paramount Pictures, and Simon and Schuster. Viacom's shareholders also voted overwhelmingly in favor of the deal, with about 95% of votes cast in favor.

Key Takeaways:

  • Blockbuster and Viacom shareholders approved a merger worth $8.4 billion, with Blockbuster stockholders voting 70% in favor and Viacom shareholders voting 95% in favor.
  • The merger combines Blockbuster's video rental chain with Viacom's diverse holdings, including MTV, Paramount Pictures, and Simon and Schuster.
  • The deal eliminates the risk posed by new technology that could make home video rentals obsolete, with Huizenga stating that "technology will threaten our video business some day."
  • Blockbuster shareholders will receive a package of Viacom shares and other securities valued at approximately $8.4 billion when the deal is completed.
  • The merged company will have $21 billion in assets and a global retail network of over 3,700 video stores and 500 music stores.
  • About 40 Blockbuster executives have agreed to stay on after the merger, with Huizenga serving as Viacom vice-chairman for a brief period.

Statistics:

  • 70% of Blockbuster shareholders voted in favor of the merger.
  • 95% of Viacom shareholders voted in favor of the merger.
  • The merger is valued at approximately $8.4 billion.
  • Blockbuster has invested $1.85 billion in Viacom to help purchase Paramount Communications.
  • The merged company will have a global retail network of over 3,700 video stores and 500 music stores.
  • Approximately 50 million people will have their entertainment habits tracked through Blockbuster's database.

Sources:

  • "Blockbuster stockholders approve Viacom merger" by The Associated Press
  • "Viacom and Blockbuster merge in $8.4 billion deal" by The Associated Press