Viacom Inc., the media company that owns CBS and MTV, offered investors a financial incentive to buy shares of the Blockbuster Inc. video rental company.

Viacom, which own 81.5 percent of Blockbuster, announced the ratio at which it would exchange its own shares for those of Blockbuster, enticing investors to make the deal by offering a premium of 19 percent, based on the closing values of the stocks Tuesday.

Investors viewed the terms of the transaction as positive for Viacom. The company's shares closed up 48 cents, at $35.08, on the New York Stock Exchange, while Blockbuster's fell 42 cents, to $7.48.

Viacom announced in February that it would separate itself from Blockbuster and take a $1.3 billion charge to reflect the declining value of the business, which has faced increased competition from cheap retail sales of DVDs and from rent-by-mail services.

The premium offered for exchange was in line with what analysts expected.

Viacom had wanted to separate itself from the video rental business to concentrate on its mainly advertising-driven media businesses such as CBS, making itself simpler to understand and more attractive to investors.

Under the terms of the tax-free exchange, which is known in Wall Street jargon as a "split-off," investors can trade in one share of Viacom's widely traded Class B shares for 5.15 shares of Blockbuster. The offer is valid until Oct. 5.

Blockbuster has strong competition from discount retailers such as Wal-Mart, which sell DVDs cheaply, and mail rental services such as Netflix.