Viacom chairman says will spin off MTV.com in IPO
Added: (Tue Nov 23 1999)
Pressbox (Press Release) -
By Yukari Iwatani
CHICAGO (Reuters) - Entertainment and publishing company Viacom Inc. plans to spin off MTV.com, the music Web site, to shareholders in the first quarter, the company said Friday.
Viacom Chairman Sumner Redstone told reporters at a news conference, "We'll probably have an IPO (initial public offering) on our music presence (on the Internet) in the first quarter."
MTV.com is the Internet companion to the popular cable music television network MTV, which would remain part of Viacom even if the online version were spun off. In the spring, Viacom had said its two main focuses on the Internet were to develop a music site and a children's site.
Redstone declined to talk about the details but hinted that Viacom has already chosen investment banks to underwrite the offering. "You will find that it's led by the best," he said.
At the news conference, which followed a speech to the Executives' Club of Chicago, Redstone also said Viacom will spin off the remainder of its video rental chain Blockbuster Inc. when Blockbuster's stock hits the $20 range.
If it gets into the 20s, you will see the spin off we planned and I think it will (reach $20),'' he said.
In August, Viacom had floated nearly a fifth of Blockbuster, or 31 million shares, in an initial public offering, with the intention of splitting off the chain. However since then, Blockbuster stock had been hovering around its initial price of $15, and analysts had questioned whether Viacom would continue with its original plans.
Blockbuster stock closed up 3/16 at 15-7/16 Friday on the New York Stock Exchange.
When asked about the regulatory issues surrounding Viacom's pending $37 billion merger with CBS network, Redstone said he would not consider taking the case to the courts in search of approval, saying "We want this merger to happen, and happen very quickly... We'll take our chances with whatever they (regulators) will do."
Redstone added, "If we have to live without UPN, if we had to live with the 35 percent reach rule, we will do so."
The U.S. Federal Communications Commission limits a TV network from reaching more than 35 percent of the nation's viewing audience, and CBS already has 33 percent. The combined CBS and Viacom would have a 41 percent reach.
Redstone said Viacom would sell its 50 percent stake in United Paramount Network (UPN) if regulators decided to enforce this rule, but added that he made a strong case and he found "the audience reception (at FCC) was extremely warm."
Redstone also said he and CBS president and chief executive Mel Karmazin were already discussing the future of the combined company. Unlike Walt Disney Co. which uses its acquired ABC television network to channel its programs, he said Viacom's Paramount studios and CBS would be kept separate.
"Paramount will sell its product to the highest bidder, not necessarily CBS. CBS will get the best product it can, whether it's from Paramount or anybody else," he said.
When asked whether he is considering creating two new cable networks for CBS News and CBS Sports after the merger, he said, ''We have had some very tentative discussions about both companies increasing their cable presence. I don't want to go any further than that,'' adding that Viacom was already working on a new cable network for senior citizens.