Wherehouse Bids for Blockbuster Music
Blockbuster has closed more than 30 stores this year in an attempt to "make the unit more attractive for a sale," the report said. Larry Gaines is the new top gun brought in to spruce up the operation. The 393-store chain posted sales of $133.3 million in the first quarter of this year, with a loss of $2.5 million.
Wherehouse has its own history of difficulties, having sought Chapter 11 bankruptcy protection in August 1995. The company emerged from bankruptcy this year with a fund of about $35 million and an agenda of shutting down its own marginal stores and buying up other music chains. A year ago, Camelot Music was unsuccessfully approached as a takeover target.
The music business has picked up slightly this past year, but has been slow for several years. A number of high-level executives were dismissed as a result, and many independent retailers have closed their doors. "The music retail business has been on its ear and . . . losing significant money," Steve Cesinger of the investment bank Greif & Company said, explaining that Viacom "may just want to get out of its leases."
Viacom is spinning off other marginal businesses---publishing house Simon & Schuster is one---to concentrate on its profitable cable-TV and movie-studio operations. In addition to Blockbuster Music, Viacom also owns Paramount Pictures and Paramount Home Video. Its long-troubled Blockbuster Video is said to be turning the corner in its quest for viability.