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Fox, Sony give Blockbuster breathing room

April 7, 2010 | 10:25 am

Blockbuster Inc. is betting its Canadian assets that more flexible payment terms from two of the biggest movie studios can help it to stay alive.

The struggling DVD rental and sales chain signed new agreements with the home video divisions of 20th Century Fox and Sony Pictures Entertainment that contain what the company called "enhanced payment terms." Blockbuster said in its most recent annual report that it would need more flexible credit terms from its major studio suppliers in order to avoid bankruptcy.

Fox and Sony aren't just taking Blockbuster's word that it's good for the money, however. In exchange for the looser credit, they have been given a first lien on all of Blockbuster Canada Co.'s assets.

Blockbuster said the deal will help it to continue its efforts to escape a crushing debt load and recapitalize the company. It is also shutting down stores, slashing costs, and is in talks with advisors to its bondholders.

The new deals, like one signed two weeks ago with Warner Bros., guarantee that Blockbuster will be able to rent Fox and Sony DVDs the same day they go on sale. Fast-growing kiosk company Redbox offers Warner Bros. movies 28 days after they go on sale and is in the midst of a dispute with Fox over the same issue. DVD mail company Netflix has a similar deal with Warner Bros. and has said it expects to agree to the same types of delays with other studios in the future.  

-- Ben Fritz

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