Viacom’s Redstone to Buy Stock--His Own

Viacom Inc. Chairman Sumner Redstone has found a new place to spend his money--buying up his own sagging stock.

Faced with Viacom shares that have fallen by about a third in the last year, billionaire Redstone unveiled a plan Thursday to buy as much as $500 million in Viacom’s stock.

Redstone and his National Amusements theater chain will buy as much as $250 million worth, with Viacom itself repurchasing as much as $250 million in stock and warrants. Redstone controls Viacom through National Amusements, which holds two-thirds of Viacom’s Class A common voting shares and 26% of the combined Class A and Class B nonvoting shares.

The move wasn’t a surprise--Viacom had been hinting it would make such a move. But the company was prohibited until it finished selling its cable television operations to Tele-Communications Inc. for $2.3 billion in late July.

Viacom’s Class A shares jumped $2 to $32.375 on the American Stock Exchange on Thursday. But analysts and investors were skeptical that the stock purchase would have much of an impact.

“It’s a step in the right direction, but not a big step,” said Harold Vogel, an analyst at Cowen & Co.

Some analysts were more bullish, however. Salomon Bros. is now recommending that investors buy the stock.

Wall Street has soured on Viacom’s stock in the last year for a number of reasons, mostly because of disappointing results from its Blockbuster chain of video and music stores, but also because the company remains burdened with a big load of debt after spending $17 billion on Paramount Communications and Blockbuster in 1994.

In addition, investors have soured on entertainment and media mergers. Time Warner Inc.’s stock, which used to hover at about $40 a share, has been trading in the low $30s.

Investors are also concerned about management and succession issues since Redstone fired Frank J. Biondi Jr. as chief executive in January. Biondi has since been hired as chief executive of MCA Inc.

Viacom is hoping to address investor issues Oct. 8 when a meeting is planned with analysts. Discussions are expected to focus on plans to boost Blockbuster’s results under Bill Fields, who was lured away from retail giant Wal-Mart Stores Inc. to head Blockbuster earlier this year.