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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
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/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
BLOCKBUSTER ENTERTAINMENT CORPORATION
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(Name of Registrant as Specified in Charter)
BLOCKBUSTER ENTERTAINMENT CORPORATION
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(Name of Person(s) Filing Proxy Statement)
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[LOGO]
May 4, 1994
Dear Fellow Shareholders:
By now you should have received your proxy materials relating to
Blockbuster's upcoming Annual Meeting. As you can see, the proposed merger with
Viacom is not on the agenda for the meeting. A number of you have asked about
the status of the transaction, and I am writing this letter to all shareholders
to bring you up to date.
As you all know, on January 7, 1994, Blockbuster entered into a merger
agreement with Viacom pursuant to which the businesses of the two companies
would be combined, together with the business of Paramount Communications Inc.,
assuming Viacom were to acquire Paramount. Pursuant to the merger, Blockbuster
shareholders would become shareholders of the combined company.
At the time your Board of Directors approved the proposed merger with
Viacom, the Board believed that the possible combination of Blockbuster, Viacom
and Paramount was consistent with and in furtherance of Blockbuster's long-term
business strategy and that the transaction was fair to and in the best interests
of all Blockbuster shareholders. Since the date the merger agreement was entered
into, there has been a substantial drop in the market prices of Viacom stock
and, based on yesterday's closing prices, the total value of the Viacom
securities to be received by Blockbuster shareholders in the merger has fallen
by almost $3.0 billion, from approximately $8.4 billion to approximately $5.4
billion (or from approximately $31 per Blockbuster share to approximately $20
per share). As a result, we have received numerous comments from shareholders
expressing their unwillingness to support the proposed transaction at these
price levels.
Although your Board of Directors continues to believe that the combination
of Blockbuster with Viacom and Paramount represents an excellent strategic
opportunity, given the current price levels of the Viacom stock, there can be no
assurance that the Board would be able to recommend the transaction at the time
of any shareholder meeting called to vote on the merger.
Under the terms of our agreement with Viacom, Blockbuster has the right to
terminate the agreement beginning on September 30, 1994 if the merger has not
been completed before that date. However, the agreement may be terminated prior
to September 30 under certain circumstances, including by mutual consent of
Blockbuster and Viacom. Between now and September 30, we will continue to honor
our agreement with Viacom, and will continue our dialogue with Viacom's
management. However, at this time, we are unable to say whether or not the
transaction will go forward or whether or not any special meeting of Blockbuster
shareholders will be called to vote on the merger. In any event, as Viacom's
second largest shareholder and its largest customer, we will continue to work
closely with Viacom to assure that our relationship remains a mutually
beneficial and productive one.
As previously announced, Blockbuster recently reported record revenue and
net income for the first quarter of this year. Revenue climbed 61% and net
income increased 62% over the comparable period in 1993. You will receive our
First Quarter Report in the near future.
We will keep you advised of further developments. In the meantime, on
behalf of the entire Board of Directors, I want to thank you for your continuing
support and encouragement.
Sincerely,
H. Wayne Huizenga
Chairman of the Board
BLOCKBUSTER Entertainment Corporation - One Blockbuster Plaza - Fort Lauderdale,
Florida 33301 - Fax (305) 832-3901 - Phone (305) 832-3000
