Malone Expects Viacom’s Debt to Derail Blockbuster Merger Plan

Cable TV magnate John C. Malone on Thursday claimed that the proposed merger between Viacom Inc. and Blockbuster Entertainment appears to be “dead,” and that Viacom is now looking at selling certain key assets to help pay off the hefty debt it took on in its acquisition of Paramount Communications.

“Blockbuster looks dead,” Malone said following a speech he gave here to business leaders after his company, Tele-Communications Inc., marked the opening of its high-tech National Digital Television Center.

Malone was responding to questions about TCI’s reported conversations with Viacom about the two companies pooling their cable TV assets in certain markets. The transaction, which could include long-term agreements for TCI cable systems to carry Viacom-owned networks like MTV and Showtime, is valued at about $2.2-billion.

A deal between TCI and Viacom, however, appears contingent on the two companies resolving the differences raised in Viacom’s still pending antitrust suit against TCI, which was filed in the heat of the Paramount takeover battle.

Malone said Viacom approached TCI about settling the lawsuit. “They approached us about not burying the hatchet in our backs,” Malone said. “They need help because they are overleveraged.”

Malone added that Viacom is an important program supplier to TCI’s 14 million cable subscribers and that TCI is a valuable customer. Viacom Chairman Sumner Redstone, Malone noted, “needs good relationships with us. . . . I would expect we will arrive at some rational solution.”

Viacom could not be reached for comment on Malone’s remarks.