Blockbuster Video Banking On A Christmas Bonus

Viacom Inc. Deputy Chairman Thomas Dooley said fourth-quarter same-store sales at its troubled Blockbuster video chain have been encouraging, though the last two weeks of the year during the holiday season will be critical.

Viacom hopes that poor weather on the East and West coasts, along with more hit movies stocked at its video stores than a year ago, will lead to better results at the nation’s largest chain. Same-store sales, which measure business at stores open at least a year, are a key barometer of a retailer’s health.

“The last 10 days of December can be worth a month in the summer,” Dooley said.

Blockbuster has been hurt this year by zigzagging retail and marketing strategies. Viacom took a $300 million charge in the second quarter to write off excess inventory and close some of its 6,000 stores. Also, video rentals have declined this year as consumers increasingly turned to pay-per-view, cable television and the Internet for entertainment.

Dooley, speaking at the Paine-Webber media conference in New York, said Blockbuster has reached agreements with some movie studios on revenue-sharing plans that would reduce the amount it pays for videos and give it access to more of them.

The company has been hurt by a shortage of hit movies that customers can rent out. He declined to provide specifics or say how many agreements have been reached.

Blockbuster is also reworking its marketing strategies, starting in five test markets around the U.S. Those plans include a shift back to a focus on videos, as opposed to an earlier failed plan to sell everything from candy to T-shirts at the stores.

Blockbuster is also putting the finishing touches on a massive distribution center in Dallas that will make it far cheaper and easier to distribute tapes to stores, he said.

“We’re trying to squeeze out a lot of overhead,” he said.

The fourth quarter will be the first chance to see if Blockbuster’s new Chief Executive John Antico’s turnaround plans are working.

Viacom’s Class B shares rose 1-3/8 to 37-9/16 in trading of 974,500, more than the three-month daily average of 737,200.

Some stocks that moved substantially or traded heavily Friday:

NYSE

Medusa, down 1-11/16 at 38-1/8.

The Cleveland cement maker said it would post a fourth quarter charge that would bring earnings below analysts’ expectations. The company said the $4 million charge was due largely to environmental issues at its Charlevoix, Michigan plant.

Cameco, down 3 1/4 at 29 3/4.

The uranium company said talks have been suspended with Russian nuclear officials and two other companies that, with Cameco, had agreed to buy enriched uranium from dismantled Russian nuclear weapons. The company said its partners have failed to agree on terms.

NASDAQ

Electronics For Imaging, down 24-1/8 at 14-7/8.

Splash Technology Holdings, down 2-3/4 at 21-3/4.

The color-printing systems maker said its fourth-quarter earnings will likely fall well below analysts’ expectations, citing weak sales in troubled Asian economies. News of trouble for the San Mateo, Calif., company led to selling of industry competitors, including EFI’s Silicon Valley neighbor, Splash Technology Holdings.

MicroTouch Systems, down 7-1/16 at 13-11/16.

The maker of touch-screen technologies’ chairman has been selling stock, The Dow Jones News Service reported. The company acknowledged it is vulnerable to weakness in Asian markets, where it does more than 15 percent of its business.

Redwood Trust, down 2-1/8 at 4.

The real estate investment trust said a “confluence of negative trends” is causing a drop in earnings for the ongoing fourth quarter. The company is based in Mill Valley, Calif.