BLOCKBUSTER CASTS SHADOW ON MERGER DEAL WITH VIACOM

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FORT LAUDERDALE, Fla.-Blockbuster Entertainment Corp. likely will let its proposed merger with Viacom die if Viacom's stock doesn't recoup roughly $2 billion in losses since the deal was announced, Chairman-CEO H. Wayne Huizenga said at the annual shareholders meeting last week.

No vote on the merger was held at the meeting, attended by more than 3,000.

"That vote may not take place," Mr. Huizenga said. Since the planned merger was announced, Viacom's stock has fallen 26%, from $31 a share to about $23-representing a $2.1 billion drop in value to Blockbuster shareholders, he said.

Though he didn't call the deal dead, Mr. Huizenga said no talks have been held between the two companies since his May 4 letter to stockholders, and he expressed doubt that Viacom could recoup the lost value.

The Blockbuster chairman said the company will use its database of 50 million cardholders and 500 million annual customer visits to cross-market among its video, videogame and music divisions.

Last year, the company also began testing in Charlotte, N.C., and Jacksonville, Fla., Blockbuster "universal" cards that will replace the laminated membership cards now used by video customers and will be accepted at any of the company's music and video stores, amphitheaters or Discovery Zone entertainment centers throughout North America.

Blockbuster also previewed two of its latest TV spots, from D'Arcy Masius Benton & Bowles, St. Louis, that broke last weekend.

One 30-second commercial shows a mother boosting a child's spirits with a movie rental. The other :30 juxtaposes a crowded bar scene with a couple relaxing in front of a movie.

Separately, Senior VP-Chief Marketing Officer Jim Hilmer said he was surprised by the recent resignation of Bill Melzer, managing director of DMB&B's St. Louis office (AA, May 23).

Mr. Hilmer said he knew nothing of Mr. Melzer's departure-or his dissatisfaction-until receiving a phone call from agency Chairman-CEO Roy Bostock.

The change does not jeopardize DMB&B's role with the $100 million account, and there has been no talk of a review, Mr. Hilmer said.

"I'm going to hold them to the same standards we were going to hold them to before, and they're down one key player," he said. "On the other hand, no one man makes an agency, and I think they'll do very well without him."

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