Company Town : Redstone Says Viacom May Get Into Record Biz

CANNES, France —  The record business seems to be music to Sumner Redstone’s ears.

The Viacom Inc. chairman, speaking in France at the international television marketing conference, said the company is edging toward record distribution, prompted by recent efforts by major record labels to form a competitor to Viacom’s MTV music channel.

Redstone said Viacom previously thought it would not go into the business. It released records from its “MTV Unplugged’ series with major record labels, he noted, earning a royalty payment. But the company believed it should not compete with its suppliers, the record companies, he said.

“Now that the record companies are interested in competing with us, it is no longer a forbidden agenda,” Redstone said. “They have already taken a shot at us, and even though I doubt their channel would ever get past the Justice Department, that is the way they have decided to do it.”

Bertelsmann Music Group, which owns the RCA and Arista labels, and cable giant Tele-Communications Inc. announced plans last year for a music video network but scrapped them in June. Warner Music, Sony, EMI and PolyGram, along with Ticketmaster, later announced similar plans.

Redstone said any Viacom record company would probably involve a distribution joint venture with another label. He also said a number of promotional opportunities involving Viacom assets exist, including its newly acquired Paramount Communications and Blockbuster Entertainment operations. Sources say one possibility is that Viacom will strike a deal with Walter R. Yetnikoff, the former CBS Records chief.

Paramount, which for years was criticized for not acquiring a record company, came close on several occasions, but talks always fell through. Blockbuster has diversified from video rentals into music retailing and is now one of the nation’s largest music store chains.