Blockbuster Is in Talks on Taking Stake in Viacom-Led TV Channel

April 29, 2008

Blockbuster Inc. is in talks about taking a stake in the new Viacom Inc.-led premium television channel that plans to compete with HBO, Showtime and Starz, according to people familiar with the situation.

As part of a deal being discussed, Blockbuster would get digital rights to the new channel's programming in return for an investment in the partnership, these people said.

Viacom, parent of the Paramount Pictures movie studio, said earlier this month it would join forces with Metro-Goldwyn-Mayer Studios Inc. and Lions Gate Entertainment Corp. to launch a new pay-TV channel that will show movies and original television series made by the three companies. The companies now sell their movies to CBS Corp.'s premium channel Showtime, but talks to renew their agreement fell apart when CBS tried to cut the price.

The new partnership is currently in talks with cable operators and various companies with digital interests about deals to distribute the as-yet unnamed channel, which will debut in fall 2009. Blockbuster has been in talks about joining the partnership for several weeks, according to people familiar with the situation.

Blockbuster is an obvious possible partner. It used to be owned by Viacom, whose executives know its business well. Blockbuster also has been casting its net wide for new partners as it attempts to spruce up its video-rental business model with new digital ventures. Last year, it acquired Internet movie provider Movielink to offer video-download services to customers, and it has focused on forging exclusive content deals for its various services. It is also attempting to buy electronics retailer Circuit City Stores Inc. for more than $1 billion.

A spokeswoman for Blockbuster declined to comment on the talks with the Viacom-led consortium, saying only: "We are busy transforming Blockbuster into a multiplatform provider of convenient access to media entertainment. To that end, we're exploring our options so it's not surprising there are rumors out there."

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