RENTRAK MULLS WAY TO CUT BLOWOUT STAKE

DAN ALAIMO

PORTLAND, Ore. -- Rentrak here is reviewing ways it might reduce its stake in fast-growing Blowout Entertainment. Blowout operates a total of 181 video rental departments in Wal-Mart and Kmart supercenters and Ralphs supermarkets. The move is part of a corporate restructuring that aims to leave Rentrak with only one operating business: the distribution of video rental cassettes on a shared transaction fee basis, said Ron Berger, chairman and chief executive officer. The company plans to spin off its other division, Pro Image, as a public company, he said. Pro Image operates and franchises sports apparel stores. For Blowout, "the options we are exploring are in the area of one type or another of spin-off public offering. We have no intention of selling the business," Berger said.

In less than a year, Blowout has grown and changed dramatically, noted Berger. It was formed in October as three companies were combined: Rentrak's Supermarket Video, Encino, Calif.; Entertainment One, Effingham, Ill., and Supercenter Entertainment Corp., Dallas. Rentrak acquired Entertainment One in May and Supercenter Entertainment in September. Meanwhile, it kept up with the rapid supercenter expansion of Wal-Mart and Kmart, bought out nine Kmart departments operated by TransWorld Entertainment, Albany, N.Y., and opened in the eight southern California stores Ralphs acquired from Smith's Food & Drug, Salt Lake City. This year, Blowout plans to open in the majority of new Wal-Mart and Kmart supercenters, a number that may exceed 100.

Although Blowout is now losing money, Berger expects the operation to start showing a profit no later than the first half of 1997, or as early as late 1996. Blowout's long-range plan is to expand the number of supermarket chains it deals with, he said. "But in the short-term, it is going to concentrate on getting financed and deal with the growth demands of its existing business," said Berger.