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Sumner Redstone’s recent moves to sell off several non-core assets from Viacom Inc. will likely bring good news to Hollywood-based Paramount Pictures.

Redstone, chairman of Viacom, is looking to sell the professional, reference and educational divisions of book publisher Simon & Schuster, which Viacom owns. In addition, there are now indications that Viacom wants to divest its stake in Blockbuster Music, but retain its Blockbuster Video chain.

By selling off these under-performing assets, Viacom will be able to reduce its substantial long-term debt burden, which stood at $7.4 billion at the end of 1997.

“Debt creates risk and slows down growth of the company as a whole, including Paramount,” said Bruce Raabe, an analyst at brokerage Collins & Co. in San Francisco. “It should give Viacom the opportunity to invest additional capital into Paramount.”

Viacom acquired Paramount back in 1995 after a bitter struggle against television mogul Barry Diller. Simon & Schuster came as part of the Paramount package.

To convince his financiers that Viacom could handle the debt load taken on to acquire Paramount, Redstone also bought Blockbuster, which at the time generated a strong cash flow. Blockbuster’s profitability turned out to be overrated, in turn making the Paramount-related debt load hard for Viacom to handle. The company’s share price fell steadily for almost two years following the Paramount deal, before rebounding in late 1997.

That rebound occurred after Redstone announced his intention to sell off several under-performing assets, and the Blockbuster Video operation started posting improved results.

Neither the book publisher nor the music chain, by comparison, offer much in the way of synergy with the rest of Viacom’s holdings, analysts said, and Blockbuster Music has been a chronic money loser in recent years.

Despite the pain associated with buying Paramount, most analysts believe Redstone is committed to keeping and possibly growing the studio. That is particularly true in the wake of the colossal box-office success of “Titanic.”

“He wants to be in show business,” said Arthur Rockwell, an analyst at Drake Capital Securities in Santa Monica. “Paramount is obviously a part of the business he wants to grow.”

Others were less confident that Paramount would enjoy a windfall from the expected sales.

Harold Vogel at Cowen & Co said that, while the asset sales would free up more capital, it is unlikely that those funds would be used to produce more Paramount films.

“I don’t think they will do that,” he said. “These guys are risk averse. If anything, they will go the other way (and produce fewer films).”

If Redstone were to use the sale proceeds to grow Paramount, Vogel said, money would more likely be directed to the video side, such as purchasing film libraries. Such a move would be less risky and more beneficial to Viacom’s extensive cable operations. Vogel said.

The next portion of Viacom’s empire likely to be put on the block by Redstone is Los Angeles-based Spelling Entertainment Group, which has developed and produced such TV hits as “Beverly Hills 90210,” analysts said.

Viacom currently holds an 80 percent stake in Spelling, which is publicly traded on the New York Stock Exchange.

“He (Redstone) would like to sell Spelling,” Rockwell said. “Spelling gets lost in the mix (of Viacom’s other holdings). As a separate entity it would have greater value.”

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