In a move that merges the Blockbuster Entertainment Corp.'s interests in film and television under one roof, Spelling Entertainment Group Inc. has agreed to acquire the Republic Pictures Corp. for $13 a share in cash, or a total of $100 million.
Blockbuster, which operates a nationwide chain of video rental stores, currently controls 67 percent of Spelling and 35 percent of Republic. After the merger, Blockbuster, based in Fort Lauderdale, Fla., will control 70 percent of the combined company.Under the agreement, Spelling, which is based in Cincinnati, will pay $13 for each of Republic's 7.7 million shares outstanding. Options and warrants to acquire Republic shares will be converted into rights to receive 1.65 Spelling shares for each Republic share.
Industry analysts said that $13 a share was a fair price to pay for Republic and that the merger would reduce overhead by combining the distribution, production and support activities of the two entertainment companies.
In addition, the analysts said the combination of Spelling and Republic gave Blockbuster a "critical mass" of feature films and television shows that the company would use to supply programming for new entertainment media, like direct broadcasting satellite, cable television, and possibly Blockbuster's own network.
"This is a defensive move by Blockbuster and it makes a lot of sense," said Jeffrey Logsdon, an analyst for Seidler Amdec in Los Angeles. "As we move into the era of the electronic superhighway where you have hundreds of channels for pay-for-view and home shopping, the video rental business will lose its edge. Blockbuster is now in a position to supply programming for that new era."