Company Town

The business behind the show

« Previous Post | Company Town Home | Next Post »

Blockbuster holds onto Warner in struggle to survive

March 23, 2010 |  3:25 pm

BlockbusterStore1 Blockbuster Inc. has gotten some much needed flexibility for the rest of the year from one of its top movie suppliers.

Warner Bros. has renewed its distribution agreement with the struggling DVD chain through the end of 2010. As part of the deal, Blockbuster will get discs for all of its services the day they go on sale.

That has been standard practice for retail rentals and digital downloads, but it wasn't clear whether Warner would allow Blockbuster to provide movies the day they go on sale through its mail service. The studio recently signed a deal with fast-growing mail rental company Netflix that prevents it from renting movies until 28 days after they go on sale.

In addition, Blockbuster will get increased supplies of Warner movies.

The new deal comes with altered financial terms. According to a person familiar with the agreement who asked not to be identified because its details are private, Blockbuster will get more flexibility in how much it pays upfront in exchange for ultimately providing Warner with a higher percentage of income from its movies as part of a revenue-sharing agreement.

Blockbuster could use the relief on upfront payments. It recently warned investors that if studios tightened credit terms, it might need to file for Chapter 11 bankruptcy protection.

--Ben Fritz

Photo: A Blockbuster in Dallas. Credit: Ron Heflin / Associated Press.