Viacom Takes Spelling Entertainment Off Market

Viacom Inc. said Tuesday it was pulling Spelling Entertainment Group Inc. off the auction block because it could not get the premium price it had expected.

Sumner Redstone, chairman of Viacom and Spelling, told shareholders at Spelling’s annual meeting in Los Angeles that Viacom had dropped its plans to sell its 75% stake in Spelling, producer of adult soaps such as “Melrose Place� and “Beverly Hills, 90210.�

Redstone also said Viacom will no longer have to buy the minority interest in Virgin Interactive Entertainment Ltd. Viacom had planned to buy Virgin, the entertainment software company that is controlled by Spelling, in its entirety in the event of a Spelling sale.

Viacom acquired the stake in Spelling--which includes a TV and film studio, licensing and distribution arm--in 1994 as part of its acquisition of Blockbuster Entertainment Group. It put it up for sale in August to reduce debt and eliminate redundancies with Viacom’s Paramount Television unit.

While the company had hoped a Spelling sale could generate $1.4 billion, offers fell far short of that price, according to analysts. PolyGram and General Electric’s NBC are believed to have led the bidding.

Spelling stock began falling fast when Viacom failed to sell the company as expected by the end of March. It closed at $9 Tuesday, up 12.5 cents for the day, but down from a peak of $13.75. Viacom Class A shares were ahead $1.375 to $43.125. Redstone’s announcement came after markets closed Tuesday.

Possibilities of a sale seemed to further evaporate last week when trade paper Variety reported that Viacom was considering using Spelling as a vehicle to bid for Metro-Goldwyn-Mayer. At Tuesday’s meeting, Redstone shot down the notion, saying he would not add more debt to the company.

Aaron Spelling, 73, head of Spelling and among the most prolific television producers in history, recently renewed his contract with the company for two more years.

Redstone did not indicate any other plan to reduce debt in light of the aborted Spelling sale. However, a spokesman said the company is “cautiously optimistic� that the $2.25-billion sale of cable operations to Tele-Communications Inc. will be approved by the Internal Revenue Service.