Shareholder Class Action Filed Against Blockbuster Inc. by the Law Firm of Schiffrin & Barroway, LLP

29 November 2005

The following statement was issued today by the law firm of Schiffrin & Barroway, LLP: Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Northern District of Texas on behalf of all securities purchasers of Blockbuster Inc. (NYSE: BBI) ("Blockbuster" or the "Company") who purchased Blockbuster shares pursuant to the Company's exchange offer of Viacom, Inc. ("Viacom") stock for 144 million common shares of Blockbuster ("the Exchange Offer"), and on behalf of those who purchased Blockbuster shares in the open market between September 8, 2004 and August 9, 2005 inclusive (the "Class Period"). If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com. The complaint charges Blockbuster, National Amusements, Inc., Viacom, Inc., John F. Antioco, Richard J. Bressler, Jackie M. Clegg, Philippe P. Dauman, Michael D. Fricklas, Linda Griego, Mel Karmazin, John L. Muething, Sumner M. Redstone, and Larry J. Zine with violations under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Splitoff and payment of the special dividend left Blockbuster without the financial resources required to implement its ambitious strategic plan; (2) that the Company, due to outdated equipment and inventory tracking issues, could not support the "No More Late Fees" program, as such could not integrate its in-store and online operations; (3) that the Company was experiencing difficulties launching its in-store DVD trading program, because it lacked adequate internal controls; and (4) that the Splitoff was engineered not to benefit Blockbuster but rather, to allow Viacom to reap hundreds of millions of dollars in proceeds from the pre-Exchange Offer Special Dividend and to reduce the public float of Viacom. On February 10, 2004, Viacom announced that it intended to divest itself of its majority interest in Blockbuster in what it characterized as a "tax free Splitoff" (the "Splitoff"). In connection with the Splitoff, Viacom declared a dividend of $5 per share, payable September 3, 2004, to Blockbuster shareholders of record at the close of business on August 27, 2004. As the owner of 147,600,352 shares of Blockbuster Class A common stock, Viacom received a total Blockbuster dividend of $738,001,760. As a consequence of the dividend, Blockbuster had to incur approximately $900 million of debt, which defendant Jackie M. Antioco, Blockbuster's Chairman and Chief Executive Officer, publicly declared was not going to harm the Company. Following the Splitoff, Blockbuster planned to initiate a new and ambitious business strategy to transform itself "from a place where you go to rent a movie to a brand where you go to rent, buy, or trade a movie or game[.]" In executing the new approach, Blockbuster introduced a series of initiatives including Internet sales, in-store movie subscription, in-store game subscription, and eliminated late fees. On August 9, 2005, Blockbuster announced that total revenues decreased 1.6% to $1.40 billion for the second quarter of 2005 from $1.42 billion for the second quarter of 2004. On this news, shares of Blockbuster fell $0.92 per share, or 11.49 percent, to close at $7.09 per share. On October 26, 2005, Blockbuster confirmed that the Company had a meeting with its lender group to discuss modifications to its credit agreement that would give the Company improved operating flexibility over the term of the original credit agreement and that as part of the modifications, the Company would pursue raising additional capital that would be used for working capital purposes including debt reduction. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com. If you are a member of the class described above, you may, not later than January 9, 2006 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action. CONTACT: Schiffrin & Barroway, LLP Darren J. Check, Esq. Richard A. Maniskas, Esq. 280 King of Prussia Road Radnor, PA 19087 1-888-299-7706 (toll-free) or 1-610-667-7706 Or by e-mail at info@sbclasslaw.com

Source: PR Newswire

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