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Blockbuster releases IPO
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August 10, 1999: 7:09 p.m. ET
Viacom's video retail unit priced at $15 a share, below expectations
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NEW YORK (CNNfn) - Blockbuster Inc., the video retail unit of entertainment giant Viacom Inc., Tuesday priced its initial public offering at $15 a share, below the $16- to $18-a-share range both it and analysts who follow the industry had anticipated.
Blockbuster said it will sell 31 million shares of ordinary stock to the public, allowing it to raise some $465 million, according to Salomon Smith Barney, the lead underwiter handling the deal. Bear Stearns is co-lead underwriter.
The money raised will allow Blockbuster to pay back some of its outstanding debt and focus on expanding its role as one of the biggest video rental chains in North America. Still, the long-anticipated offering comes as the IPO train appears to be grinding to a halt.
A number of recent IPOs have been priced below their initial targets, and other offerings such as Women.com have been postponed indefinitely as investors leery of higher interest rates and waning corporate profits have hesitated to jump into the fray.
Hotjobs.com (HOTJ), an online recruiting company, Monday lowered its target to between $9 and $11 a share from its initial pricing of $12 to $14. It also scaled back the number of shares it issued to 3 million from 4.75 million. The stock was finally priced at $8 and ended the day Tuesday at 7-5/8.
And Big Star Entertainment Inc., which sells videos and digital video disks, faded last week after it was forced to revise its IPO price downward to $10 a share from $12 to $14 a share. Big Star (BGST) finished its first day last week down 1-27/32 at 8-5/32. It closed Tuesday at 6.
William Smith, president and portfolio manager of IPO Plus Aftermarket Fund (IPOSX), said new issues are falling out of favor because of broader market concerns about pending interest rate hikes and the overvaluation of many Net-related shares.
Still, Gail Bronson, senior analyst for the IPO Monitor, an online newsletter tracking the IPO industry, said the lackluster debuts may have more to do with seasonal factors than a change in market sentiment.
"Selling Internet IPOs in the summer is like selling ice in the winter," Bronson said. "Summer is not the time to come out with IPOs."
Once Blockbuster's offering is completed, Viacom will own approximately 82 percent of Blockbuster's outstanding shares. The proposed symbol the company will trade under on the New York Stock Exchange is BBI.
Blockbuster is the world's leading retailer of rentable home videocassettes and video games with more than 6,500 stores worldwide. Viacom (VIA) is one of the world's largest entertainment companies with operations that include Blockbuster, MTV Networks, Paramount Pictures and a number of other media and television operations. 
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Blockbuster
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