Viacom to shed Spelling unit

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Viacom, which is believed to be contemplating a bid to acquire CBS, has retained investment banker Bear Stearns & Co. to help sell its Spelling Entertainment Group subsidiary. Viacom owns 78% of Spelling as part of its purchase of Blockbuster Entertainment Corp. last September. Prior to selling those assets, Viacom will acquire Spelling's interest in multimedia software developer Virgin Interactive Entertainment.

Viacom has been divesting "non-strategic" assets in an effort to pay down some of the debt it assumed in acquiring Blockbuster and Paramount Communications. Viacom officially is on record as saying CBS is overpriced and that it is not interested in acquiring it. (CBS has accepted an $81 per share offer from Westinghouse Electric, but other bids are expected.) However, Viacom officials have an interest in keeping the company's stock price above a certain level through the end of September, or else they risk paying a penalty to shareholders related to their acquisitions of Paramount and Blockbuster. If Viacom expresses an overt interest in CBS, it is not likely to be until after that deadline expires, because of the deleterious effect it would have on Viacom's stock price.

Copyright August 1995 Crain Communications Inc.

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