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Blockbuster in Talks for Stake in Viacom Premium Cable Channel

May 6, 2008

According to recent reports, Blockbuster has been in talks for several weeks to buy a stake in a new premium cable TV channel to be launched by Viacom in conjunction with Lions Gate Entertainment and Metro-Goldwyn-Mayer. A deal would be based on Blockbuster obtaining digital rights to the channel's programming in exchange for an investment in the partnership.

Viacom Announced Premium Channel Launch on April 20

Viacom and its two current partners announced plans on April 20 to launch a new premium television channel in September 2009 after talks with CBS Corp's Showtime to renew movie licensing deals broke down. The new channel is as yet unnamed, but will feature such movies as Iron Man, Cloverfield, the upcoming Star Trek, and Valkyrie, as well as older movies from the studios' portfolios and original programming. It’s expected that cable operators will need to charge as much as $5 per subscriber per month to turn a profit from the new channel.

Blockbuster Also Pursuing Circuit City

Blockbuster also recently announced that it has offered to buy electronics retailer Circuit City for a price of $6 per share, subject to due diligence. Blockbuster stated in a recent news release that it made the bid public because Circuit City shareholders should have the opportunity to participate in determining the destiny of the company.

Blockbuster noted the combination of the two companies would result in an $18 billion global retail enterprise positioned to capitalize on the growing convergence of media content and electronic devices. The transaction would allow both companies to benefit from the revenue growth generated by their complementary products, while the resulting synergies would substantially improve consolidated financial performance, thereby increasing shareholder value.