Taco Bell Chief Leaving for Blockbuster

Taco Bell Corp. President John F. Antioco, a leading contender for the top job at PepsiCo Inc.’s planned restaurant company, abruptly resigned Tuesday to become chairman and chief executive of the struggling Blockbuster Entertainment video chain.

Antioco, 47, who engineered a successful turnaround at Circle K Corp. before joining Taco Bell eight months ago, will join Blockbuster, a Viacom Inc. subsidiary, on July 1. He will succeed Bill Fields, a former top Wal-Mart Stores Inc. executive who quit unexpectedly in April after acknowledging that the chain’s first-quarter results would be far worse than expected.

Dallas-based Blockbuster--the nation’s dominant video rental chain, with 5,300 locations nationwide and $3 billion in revenue--has been hurt by an overall weak market for video rentals.

Industry analysts say Blockbuster has also failed to adequately cash in on growing consumer desire to buy videos rather than rent them. And the company’s profit margins were drained by Fields’ ill-advised bid to boost revenue through the sale of apparel, magazines, books and candy, as well as higher-than-expected costs to relocate the corporate headquarters from Florida.

Fields, who now heads Canada’s Hudson Bay chain of stores, also alienated some Hollywood studios by squeezing them to lower prices, much as Wal-Mart does with its suppliers.

Blockbuster’s troubles have alienated investors who had high hopes in 1994 when Viacom acquired the chain for $8.4 billion when it was headed by H. Wayne Huizenga. Viacom Chairman Sumner Redstone envisioned Blockbuster as a machine that would create cash that Viacom could use to pay down nearly $10 billion in debt from its purchase of Paramount Communications.

Redstone effectively dictated Antioco’s mandate on May 29 when he told Viacom shareholders that a Blockbuster turnaround is “the overriding issue for us right now.”

Analysts say Antioco’s first step will be to restore the chain’s strategic direction.

“They’re going to have to refocus on the basics,” said David Doft, an industry analyst in New York with Furman Selz. “Redstone has already laid out that plan. And after they get back on track with a renewed emphasis on video rentals, then they can let John Antioco do his thing.”

Among the major hurdles facing Antioco, Hollywood executives say, will be deciding the future of Blockbuster’s troubled music retail operations, devising a better marketing plan than its previous, much-criticized “one world” campaign, and maintaining a decent relationship with Redstone, one of the most hands-on executives in the entertainment industry.

Analysts say Antioco might be better suited to Blockbuster’s needs than was Fields, who spent most of his career with Wal-Mart and whom Redstone once mentioned as his possible successor at Viacom.

“Bill Fields had a ‘big-box’ operation background and John Antioco is more familiar with small-store operations,” Doft said. “The test will be if he can use Blockbuster’s good name to restore market share . . . and if he’s on the same page as Sumner Redstone.”

Antioco, who joined Taco Bell in October, is credited with reversing a six-quarter slide in same-store sales, or sales at stores open at least a year. He previously held management posts at Southland Corp., which owns the 7-Eleven retail chain, and was chief operating officer for eyeglass retailer Pearle Vision. Prior to joining Irvine-based Taco Bell, Antioco helped to pull the Circle K chain out of bankruptcy. He subsequently completed Circle K’s initial public stock offering and later brokered the chain’s sale to Tosco Corp.

Antioco’s departure prompted speculation that PepsiCo has selected another executive to lead the huge restaurant company that will be created when the soft drink and snack food giant spins off Taco Bell, Pizza Hut and KFC later this year.

But Antioco said Tuesday that although he was a “top contender” for the new restaurant company’s top job, his decision to leave Taco Bell after just eight months was independent of PepsiCo’s planning process. Antioco said he has been talking to Redstone for about a month.

In trading Tuesday, Viacom Class B shares rose 12.5 cents to close at $29.75 on the American Stock Exchange, and PepsiCo shares added 37.5 cents to close at $38.125 on the New York Stock Exchange.

In a related announcement, PepsiCo Chairman and Chief Executive Roger Enrico said the restaurant company’s management team will be named “in the next couple of weeks.” A Taco Bell spokeswoman said Antioco’s replacement will be named at the same time.

Times staff writer James Bates contributed to this report.