Viacom Plans IPO for Part of Blockbuster

NEW YORK —  Viacom Inc., the world’s No. 4 media company, will sell 15% to 20% of its Blockbuster Entertainment unit to the public for about $700 million, a person familiar with the company’s plan said Monday.

The sale of a stake in Blockbuster, the world’s largest video retail chain, is expected to be filed within two months, the person said. Viacom, which also owns the MTV cable television channel and Paramount Pictures, had said it would probably sell part of Blockbuster and spin off the rest of the unit.

The once-struggling Blockbuster has turned around, with rental revenue rebounding in late 1997 after a two-year slump. Since then, it’s posted consecutive sales gains every quarter.

The unit is benefiting from a revenue-sharing agreement that Chairman Sumner Redstone reached with Hollywood studios that lowered the cost of videos that the chain buys.

The sale and spinoff would make Viacom a pure media company. It would “remove one part of Viacom that had been its poorest performer and has really held the stock back the last couple years,” said Barry Hyman, senior market analyst at Ehrenkrantz King Nussbaum Inc. in New York.

In other company news, Viacom’s MTV Networks, which includes the Nickelodeon, MTV and VH1 cable channels, is expected to unveil plans to bolster its Internet presence as it seeks to be more competitive with other online media ventures.

Viacom said it will hold a news conference in Beverly Hills today to announce “new online business ventures.”

Shares of New York-based Viacom rose 81 cents to close at $85.63 on the American Stock Exchange.