49.wherehouse/LK1st/mark2nd

No. 49

Wherehouse Buys Blockbuster Music

Wherehouse Entertainment Inc. is no longer singing the blues.

In an effort to boost its presence on the music-retail scene, the once-bankrupt music chain purchased Dallas-based Blockbuster Music for $115 million in cash in August, in a deal that makes Torrance-based Wherehouse the nation’s second-largest music retailer.

Prior to the deal, Wherehouse operated 220 stores in seven Western states. The acquisition of Blockbuster’s 378 music shops opens new markets for Wherehouse in Texas, Florida and Illinois. Both chains have their biggest presence in Southern California, where Blockbuster has operated 52 stores and Wherehouse about 70. For Blockbuster, meanwhile, the sale allowed its parent, New York-based entertainment giant Viacom, to ease the burden of its $2 billion in debt.

Since emerging from a two-year bankruptcy in 1997, Wherehouse has been on a rebound, posting earnings of $24 million in 1997 compared with $1.6 million the year before. Wherehouse also has begun branching out to ethnic markets, opening a series of “Tu Musica” stores in Latino communities.

Nola L. Sarkisian