SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
SCHEDULE 13D
(Amendment No. 6)
Under the Securities Exchange Act of 1934
DISCOVERY ZONE, INC.
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
25468B 10 7
(CUSIP Number)
Philippe P. Dauman, Esq.
Viacom Inc.
1515 Broadway
New York, New York 10036
Telephone: (212) 258-6000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications)
Copy to:
Creighton O' M. Condon, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telephone: (212) 848-4000
April 17, 1995
(Date of Event which Requires Filing of this Statement)
========================================
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this
statement [ ].
Page 1
CUSIP No. 25468B 10 7
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
VIACOM INC.
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I.R.S. Identification No. 04-2949533
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(2) Check the Appropriate Box if a Member of Group (See
Instructions)
[ ] (a)
----------------------------------------
[ ] (b)
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(3) SEC Use Only
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(4) Sources of Funds (See Instructions)
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(5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e).
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(6) Citizenship or Place of Organization Delaware
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Number of (7) Sole Voting Power
----------------------------
Shares
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Beneficially (8) Shared Voting Power 24,220,354
--------------------------
Owned by
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Each (9) Sole Dispositive
Power
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Reporting
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Person (10) Shared Dispositive Power 24,220,354
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With
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
24,220,354
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
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(13) Percent of Class Represented by Amount in Row (11)
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49.6%
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(14) Type of Reporting Person (See Instructions) CO
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Page 2
CUSIP No. 25468B 10 7
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
SUMNER M. REDSTONE
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S.S. No.
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(2) Check the Appropriate Box if a Member of Group (See
Instructions)
[ ] (a)
---------------------------------------------
[ ] (b)
---------------------------------------------
(3) SEC Use Only
------------------------------------------------
------------------------------------------------------------
(4) Sources of Funds (See Instructions)
------------------------
------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e).
-----------------------------
(6) Citizenship or Place of Organization United States
------------------------
------------------------------------------------------------
Number of (7) Sole Voting Power
---------------------------
Shares
----------------------------------------------------
Beneficially (8) Shared Voting Power 24,220,354
-------------------------
Owned by
----------------------------------------------------
Each (9) Sole Dispositive Power
-----------------------
Reporting
-------------------------------------------------
Person (10) Shared Dispositive Power 24,220,354
----------------------
With
---------- ------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
24,220,354
------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
-----------------------------------
------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
----------
49.6%
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(14) Type of Reporting Person (See Instructions) IN
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Page 3
This Amendment No. 6 amends the Statement on Schedule 13D filed with
the Securities and Exchange Commission on June 3, 1993, as amended (the
"Statement") by Sumner M. Redstone and Viacom Inc. ("Viacom"). This Amendment
No. 6 is filed with respect to the shares of common stock, par value $.01 per
share (the "Common Stock"), of Discovery Zone, Inc., a Delaware corporation
(the "Issuer"), with its principal offices located at 205 North Michigan
Avenue, Chicago, Illinois 60601. Capitalized terms used but not defined
herein have the meanings assigned to such terms in the Statement.
Item 2. Identity and Background.
-----------------------
Item 2 is hereby amended and supplemented to reflect changes in the
directors and executive officers of Viacom as set forth on Schedule I attached
hereto. Schedule I sets forth the following information with respect to each
such person:
(i) name;
(ii) business address (or residence where indicated); and
(iii) present principal occupation or employment and the name,
principal business and address of any corporation or other organization in which
such employment is conducted.
All of the directors and executive officers of Viacom are citizens of
the United States.
During the last five years, neither Viacom nor any person named in
Schedule I attached hereto (including Sumner M. Redstone) has been convicted in
a criminal proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 4. Purpose of Transaction.
----------------------
Item 4 of the Statement is hereby amended and supplemented as follows:
Viacom and Blockbuster Entertainment Group, a division of
Viacom ("Blockbuster"), have entered into a five-year Management Services
Agreement dated April 17, 1995 (the "Management Services Agreement") with
the Issuer. Blockbuster has agreed to assume the management of the operational
and administrative functions of the Issuer, subject to certain closing
conditions. Blockbuster will be reimbursed for the costs and expenses incurred
in the provision of management services to the Issuer, and the Issuer will
issue to Viacom, on the effective date of the Management Services Agreement,
warrants (the "Warrants") to purchase an aggregate of 473,463 shares of a
new class of noncumulative convertible voting participating preferred stock
(the "Preferred Stock") of the Issuer.
Page 4
The Warrants will be divided into three classes, Series A Warrants,
Series B Warrants and Series C Warrants, which will be exerciseable for an equal
number of shares of Preferred Stock, will vest on the first, second and third
anniversaries of the effective date of the Management Services Agreement and,
except under certain circumstances, will not be exercisable until December 16,
1998. Each share of Preferred Stock issuable upon exercise of the Warrants
will have a liquidation preference of $.10 per share, will be entitled to
noncumulative dividends in an amount equal to the greater of (x) 5% of the
liquidation preference per share, when, as and if declared by the board of
directors of the Issuer and (y) a pro rata share of the dividends paid with
respect to the Common Stock (based on the number of shares of Common Stock the
Preferred Stock is convertible into), will vote with the Common Stock as one
class on all matters submitted to the stockholders of the Issuer (based on the
number of shares of Common Stock the Preferred Stock is convertible into) and
will automatically convert into 24 shares of Common Stock, subject to
adjustment, immediately but only following a sale of the Preferred Stock to a
person unaffiliated with Viacom. The exercise prices for the Series A Warrants,
Series B Warrants and Series C Warrants per share of the Common Stock into which
the Preferred Stock is convertible are $10.375, $11.931 and $14.317,
respectively.
In addition, the non-Viacom directors of the Issuer other than Donald
F. Flynn have agreed to resign on the effective date of the Management Services
Agreement and the Issuer's current directors have agreed to cause nominees
designated by Viacom to be appointed to Issuer's board of directors. Donald
F. Flynn has resigned as Chief Executive Officer of the Issuer and Steven R.
Berrard, the Chief Executive Officer of Blockbuster, has been appointed
interim Chief Executive Officer of the Issuer.
Pursuant to a Stock Purchase Agreement dated as of April 17, 1995 (the
"Stock Purchase Agreement") among DKB, Inc., Kevin F. Flynn June, 1992 Non-
Exempt Trust and Brian J. Flynn June, 1992 Non-Exempt Trust, as sellers (the
"Sellers"), Donald F. Flynn, Kevin F. Flynn and Brian J. Flynn, as guarantors,
and Viacom and its indirect wholly owned subsidiary Blockbuster Discovery
Investment, Inc. ("BDI"), as purchasers (the "Purchasers"), subject to
regulatory and other closing conditions, (i) Viacom, through BDI, has agreed
to purchase 3,818,649 shares of Common Stock at a price of $6.50 per share
from the Sellers, following the exercise by the Sellers of warrants to acquire
shares of Common Stock, (ii) in order to allow the Purchasers to maintain their
ownership percentage of Common Stock at 49.99%, the Sellers have agreed to
grant to the Purchasers a two-year option to acquire up to 2,210,695 shares of
Common Stock at a price equal to 75% of their market price; provided, however,
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that such price shall never be less than $6.50 or more than $12.50 per share,
and (iii) the Sellers have agreed to grant to the Purchasers a two-year right
of first offer covering an additional 1,205,156 shares of Common Stock.
Following the acquisition of the shares of Common Stock by the Sellers, upon
exercise of their warrants, and the purchase of the 3,818,649 shares of Common
Stock pursuant to the Stock Purchase Agreement, Viacom will own approximately
49% of the outstanding Common Stock, based upon the number of shares of Common
Stock outstanding as of April 17, 1995.
Pursuant to a letter agreement dated April 17, 1995 (the "Letter
Agreement") among the Issuer, Blockbuster Family Fun, Inc. and Family
Entertainment Centers, Inc., the Issuer has agreed to acquire, subject to
regulatory and other conditions, the assets of two entertainment centers
currently operated under the "Block Party" name and mark from subsidiaries of
Viacom for the lesser of the cost of the entertainment centers and $15,000,000,
payable in ten year subordinated notes of the Issuer.
Page 5
A copy of the press release issued by the Issuer on April 17, 1995
relating to the foregoing transactions, the Management Services Agreement, the
Stock Purchase Agreement and the Letter Agreement are attached hereto as
exhibits and are incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
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See Item 4 for information which may be required by this Item 5.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
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to Securities of the Issuer.
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See Item 4 for information which may be required by this Item 6.
Item 7. Material to be Filed as Exhibits.
--------------------------------
A. Management Services Agreement dated April 17, 1995, among the Issuer,
Blockbuster and Viacom.
B. Stock Purchase Agreement dated as of April 17, 1995 among DKB, Inc.,
Kevin F. Flynn June, 1992 Non-Exempt Trust and Brian J. Flynn June,
1992 Non-Exempt Trust, as sellers, Donald F. Flynn, Kevin F. Flynn and
Brian J. Flynn, as guarantors, and Viacom and BDI, as purchasers.
C. Letter Agreement dated April 17, 1995 among the Issuer, Blockbuster
Family Fun, Inc. and Family Entertainment Centers, Inc.
D. Press release issued by the Issuer on April 17, 1995.
Page 6
Signature
- ---------
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this Statement is true, complete
and correct.
April 18, 1995 VIACOM INC.
By /s/ Michael D. Fricklas
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Name: Michael D. Fricklas
Title: Senior Vice President
and Deputy General Counsel
Page 7
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
April 18, 1995
*
---------------------------------------------
Sumner M. Redstone, Individually
*By /s/ Philippe P. Dauman
------------------------------------------
Philippe P. Dauman
Attorney-in-Fact under the
Limited Power of Attorney filed
as Exhibit 99.2 to the Statement,
Amendment No. 4.
Page 8
Schedule I
Executive Officers
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
---- ----------------- ------------- --------------
Sumner M. Redstone* Viacom Inc. and Chairman of the Board of National Amusements, Inc.
Viacom International Inc. Viacom Inc. and Viacom 200 Elm Street
1515 Broadway International Inc.; Dedham, MA 02026
New York, NY 10036 Chairman of the Board Viacom Inc. and
and President, Chief Viacom International Inc.
Executive Officer of 1515 Broadway
National Amusements Inc. New York, NY 10036
H. Wayne Huizenga* Blockbuster Entertainment Vice-Chairman of the Blockbuster Entertainment
Group Board of Viacom Inc. and Group
One Blockbuster Plaza Chairman of Blockbuster One Blockbuster Plaza
Fort Lauderdale, FL Entertainment Group; Fort Lauderdale, FL 33301
33301 Chairman of the Board of
Huizenga Holdings, Inc.
Frank J. Biondi, Jr.* Viacom Inc. and President, Chief Viacom Inc. and
Viacom International Inc. Executive Officer of Viacom International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
Vaughn A. Clarke Viacom Inc. and Sr. VP, Treasurer of Viacom Inc. and
Viacom International Inc. Viacom Inc. and Viacom Viacom International Inc.
1515 Broadway International Inc. 1515 Broadway
New York, NY 10036 New York, NY 10036
Philippe P. Dauman* Viacom Inc. and Executive VP, General Viacom Inc. and
Viacom International Inc. Counsel, Chief Viacom International Inc.
1515 Broadway Administrative Officer 1515 Broadway
New York, NY 10036 and Secretary of Viacom New York, NY 10036
Inc. and Viacom
International Inc.
Thomas E. Dooley Viacom Inc. and Executive VP, Finance, Viacom Inc. and
Viacom International Inc. Corporate Development Viacom International Inc.
1515 Broadway and Communications of 1515 Broadway
New York, NY 10036 Viacom Inc. and Viacom New York, NY 10036
International Inc.
Carl Folta Viacom Inc. and Sr. VP, Corporate Viacom Inc. and
Viacom International Inc. Relations of Viacom Inc. Viacom International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
Michael D. Fricklas Viacom Inc. and Sr. VP, Deputy General Viacom Inc. and
Viacom International Inc. Counsel and Assistant Viacom International Inc.
1515 Broadway Secretary of Viacom Inc. 1515 Broadway
New York, NY 10036 and Viacom International New York, NY 10036
Inc.
____________________
* Director
Page 9
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
---- ----------------- ------------- --------------
Susan Gordon Viacom Inc. and VP, Controller and Chief Viacom Inc. and
Viacom International Inc. Accounting Officer of Viacom International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
Rudolph L. Hertlein Viacom Inc. and Sr. VP of Viacom Inc. Viacom Inc. and
Viacom International Inc. and Viacom International Viacom International Inc.
1515 Broadway Inc. 1515 Broadway
New York, NY 10036 New York, NY 10036
Edward D. Horowitz Viacom Inc. and Sr. VP, Technology of Viacom Inc. and
Viacom International Inc. Viacom Inc. and Viacom Viacom International Inc.
1515 Broadway International Inc.; 1515 Broadway
New York, NY 10036 Chairman, Chief New York, NY 10036
Executive Officer of
Viacom Interactive
Henry Leingang Viacom Inc. and Sr. VP, Chief Viacom Inc. and
Viacom International Inc. Information Officer of Viacom International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
William A. Roskin Viacom Inc. and Sr. VP, Human Resources Viacom Inc. and
Viacom International Inc. and Administration of Viacom International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
George S. Smith, Jr. Viacom Inc. and Sr. VP, Chief Financial Viacom Inc. and
Viacom International Inc. Officer of Viacom Inc. Viacom International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
Mark M. Weinstein Viacom Inc. and Sr. VP, Government Viacom Inc. and
Viacom International Inc. Affairs of Viacom Inc. Viacom International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
Directors
George S. Abrams Winer & Abrams Attorney, Winer & Abrams Winer & Abrams
1 Court Street 1 Court Street
Boston, MA 02108 Boston, MA 02108
Steven R. Berrard Blockbuster Entertainment President and Chief Blockbuster Entertainment
Group Executive Officer of the Group
One Blockbuster Plaza Blockbuster One Blockbuster Plaza
Fort Lauderdale, FL Entertainment Group Fort Lauderdale, FL 33301
33301
Page 10
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
---- ----------------- ------------- --------------
William C. Ferguson NYNEX Corporation Chairman of the Board NYNEX Corporation
335 Madison Avenue and Chief Executive 335 Madison Avenue
New York, NY 10017 Officer of NYNEX New York, NY 10017
Corporation
George D. Johnson, Jr. Blockbuster Entertainment President -- Domestic Blockbuster Entertainment
Group Consumer Division of the Group
One Blockbuster Plaza Blockbuster One Blockbuster Plaza
Fort Lauderdale, FL Entertainment Group Fort Lauderdale, FL 33301
33301
Ken Miller C.S. First Boston Vice Chairman of C.S. C.S. First Boston
Park Avenue Plaza First Boston Park Avenue Plaza
55 East 52nd Street 55 East 52nd Street
New York, NY 10055 New York, NY 10055
Shari Redstone National Amusements, Inc. Executive Vice President National Amusements, Inc.
200 Elm Street of National Amusements, 200 Elm Street
Dedham, MA 02026 Inc. Dedham, MA 02026
Brent D. Redstone National Amusements, Inc. Self-Employed
Showtime Networks Inc.
8101 East Prentice Ave.
Englewood, CO 80111
Frederic V. Salerno NYNEX Corporation Vice Chairman--Finance NYNEX Corporation
335 Madison Avenue and Business Development 335 Madison Avenue
New York, NY 10017 of NYNEX Corporation New York, NY 10017
William Schwartz Yeshiva University VP for Academic Affairs Yeshiva University
2495 Amsterdam Avenue (chief academic officer) 2495 Amsterdam Avenue
New York, NY 10033 of Yeshiva University New York, NY 10033
Page 11
Exhibit Index
Exhibit No. Description Page No.
- ---------- ----------- --------
A. Management Services Agreement dated April 17, 1995, among the
Issuer, Blockbuster and Viacom.
B. Stock Purchase Agreement dated as of April 17, 1995 among DKB,
Inc., Kevin F. Flynn June, 1992 Non-Exempt Trust and Brian J.
Flynn June, 1992 Non-Exempt Trust, as sellers, Donald F. Flynn,
Kevin F. Flynn and Brian J. Flynn, as guarantors, and Viacom and
BDI, as purchasers.
C. Letter agreement dated April 17, 1995 among the Issuer,
Blockbuster Family Fun, Inc. and Family Entertainment Centers,
Inc.
D. Press release issued by the Issuer on April 17, 1995.