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Corner Turned, Blockbuster's New CEO Says

April 08, 1998|JAMES BATES | TIMES STAFF WRITER

Blockbuster Video is launching a major push to sell and rent digital videodisc equipment and movies, and also is ending a brief moratorium on opening new stores, the company's new chief executive said Tuesday.

John Antioco said in an interview that the video chain will roll out its DVD program in 1,000 stories within two months: "We think its going to really be a good rental business."

As for new stores, Antioco said that the company, which has about 4,000 stories nationwide, will end a "hiatus" next month on new store openings, planning to open about 200 additional stores this year.

Antioco's comments were part of a daylong effort by Blockbuster and its parent company, Viacom Inc., to stress that the nation's largest video chain has finally turned the corner and that its lagging sales, management and strategic problems have been addressed. The company invited analysts to Blockbuster's headquarters in Dallas, where they heard presentations on Viacom that largely focused on Blockbuster, which has been its most troubled unit.

The company said rental revenue at Blockbuster stores open at least one year rose 9.3% in the first quarter compared with a year earlier.

"It is fixed," Viacom Chairman Sumner Redstone said in an interview. "Up until now, I've been saying I'm confident we are going to turn it around, but it's not in the bag. For the first time, it is in the bag."

A former executive at Taco Bell, Antioco was hired 10 months ago, relacing former Wal-Mart executive Bill Fields, who left abruptly after a year on the job.

The biggest change Antioco has presided over is a new system of revenue sharing between Blockbuster and the Hollywood studios, which Redstone said is the primary reason for the turnaround. Redstone said studios and Blockbuster are benefiting because stores have more titles in stock, so fewer customers are walking away empty-handed because all the copies of the movie they want have already been rented.

"We recognized that the customers were used to going to a video store and not getting what they came for," Redstone said. "It's like walking into Burger King and being told all they have is French fries. That's how the industry operated."

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Under the arrangement, Blockbuster buys more videos from the studios at lower rates, but shares rental revenue with them. Most studios have agreed to the arrangement, including one holdout signed just this week. Viacom executives declined to identify the studio.

Sources, however, said that the company is Warner Home Video, although the sources added that a formal agreement is still to come. Warner declined to comment, but other sources said Warner plans to extend revenue sharing arrangement to other video chains, not just Blockbuster.

In addition to the revenue sharing, Antioco said the first-quarter results were also up because of the performance of such top rental titles as "Con Air," "Air Force One" and "In and Out."

Part of Antioco's strategy has been to return Blockbuster to its core business of video rentals, getting rid of the general merchandise in stories that was part of Fields' strategy.

Many analysts expect Viacom to spin off Blockbuster, which Viacom acquired in 1994 for $8.4 billion, possibly by late next year.

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