Viacom co. splitting into business, tech, ops units

NEW YORK — Blockbuster Inc. is splitting its business into three separate operating units, as it faces a future threatened by new technology, and ahead of a planned sale of the company by its parent, Viacom.

The giant video retailer announced late Friday that it will create a division called Blockbuster Worldwide Store Operations, led by Nigel Travis, to oversee all retail outlets worldwide. Blockbuster’s 6,900 stores span the U.S. and 25 other countries.

Blockbuster Entertainment Technologies will encompass Blockbuster.com, headed by e-commerce prexy Shellye Archambeau, as well as a New Media Group, led by Santo Politi, that will explore various forms of electronic home entertainment delivery.

Representing a new business for the Dallas-based group, the third division, Blockbuster Business Solutions, will market the company’s database, brand and media assets in the business-to-business arena. Greg Smogard, formerly senior VP relationship marketing, has been named president of that unit.

All execs will report to Blockbuster chairman and CEO John Antioco. Chief operating officer Gary Peterson is departing in the shuffle, which decentralizes the company’s business. “There was just no place for him in the new structure,” noted one insider noted.

Antioco commented: “This organizational change will allow each of our divisions to focus on their respective areas, while at the same time working together to create new levels of value for our shareholders and ensure the success of Blockbuster today and in the future.” He said the company’s unquestionably strong brand, its customer database, marketing and distribution capabilities and studio relationships will enable it to “deliver movies to people at home, however they want to receive them — whether it is through our stores, through Blockbuster.com or through other emerging technologies.”

The anticipated dissemination of video-on-demand, which will let studios and cable operators offer consumers a giant library of films with the click of a button, is a very real threat to the long-term viability of the corner videostore, according to many Wall Streeters and industry watchers.

Blockbuster is banking on the fact that its well-known name, its domination of the market and a new approach to its businesses, evident in the revamp just announced, will help it weather the transition.

The company said Blockbuster.com is likely to be spun off into a separate, publicly traded entity sometime next year.

A chunk of Blockbuster itself was spun off last summer as a first step in Viacom’s stated intention of selling the entire company. But the stock price has moved mostly sideways, not reaching much beyond the $15 level. At that level, Viacom chairman/CEO Sumner Redstone and his new partner, CBS Corp. chief Mel Karmazin, consider the stock undervalued. Redstone said at a media conference last week that he wouldn’t consider selling the rest of Blockbuster unless the shares move into the $20s.

Viacom and CBS are in the process of merging.

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