Dish Network to acquire Blockbuster for $320 million

Satellite television provider Dish Network has emerged as the upcoming owner of Blockbuster Inc. It has agreed to pay $320 million for virtually all the assets of the troubled home-video chain, making it the winner of a bankruptcy auction that began Monday.

Other bidders at the proceedings in a bankruptcy court in New York included billionaire investor Carl Icahn, South Korea's SK Telecom, and a group of Blockbuster creditors.

In Blockbuster, Dish will get a once-dominant brand that is now struggling, having seen its business deteroriate rapidly in the last several years largely due to fast-growing compeitors such as Redbox and Netflix. Blockuster, saddled with debt, has shut down more than a thousand stores over the last year. It currently operates 1,751 stores in the U.S., compared with 3,425 in 2010.

In a statement, a Dish executive indicated that the satellite television company will use Blockbuster to promote its services and extend its ability to deliver movies, presumably by way of the Internet as the business increasingly goes digital.

“With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network,” said Tom Cullen, executive vice president of sales, marketing and programming for Dish Network. “While Blockbuster’s business faces significant challenges, we look forward to working with its employees to reestablish Blockbuster’s brand as a leader in video entertainment.”

The acquisition, which includes $228 million in cash and still needs court approval, is expected to close by the end of June.

Because it has been in Chapter 11 bankruptcy since September, Blockbuster no longer carries the almost $1 billion in debt that nearly crushed the company last year. Creditors including Icahn had planned to reorganize the home-video chain in Chapter 11 but disagreed over how much cash to infuse it with as sales deteroriated over the holidays, leading to the decision in February to sell Blockbuster's assets at auction.

[Update, 4:45 p.m.: For much more, see the story in tomorrow's Times on Dish Network's plans for Blockbuster.]

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Bidders including Dish Network and Carl Icahn lining up for Blockbuster auction

-- Ben Fritz

Comments

[Jennifer keith]

I have Dish and they have the WORST customer service.

[Mike]

Studebaker just bought Rambler

[Nomo Blockbuster]

Tsk tsk tsk, Dish. Now both Blockbuster's and your stock will plummet. You clearly didn't do your homework on this one. Blockbuster has had losses upon losses upon losses and is no longer valued in today's business world. Unless you turn Blockbuster stores into 'Dish' stores, you've just wasted $320 million. Many wanted to see Blockbuster finally die and you blew it. I speak for many when I say you will not have my business.

[yehudi]

What a bargain basement purchase !! Maybe the dish network will make some profit out of this losing company, once 'proud and arrogant' as the only video outfit in the world from their viewpoint.

[Graz]

The saga of Blockbuster should serve as a warning regarding the dangers of ignoring customer service. I've read about many people that were like me; having late fees assessed even when rentals were returned on time. I actually had to show a clerk the movie that was sitting on the shelf that I had returned which they said hadn't been. Even after showing them it had been returned, they still wouldn't remove the late fee. A letter to corporate about my experience only generated a reply that basically said "So what?" in so many words. They were the only major game in town and acted like it, sowing the seeds for their downfall.

[CA is a MESS]

320 million wow blockbuster lost alot of value over the years -- I believe when blockbuster owned the florida marlins they sold them for 350 million...he should have kept them now their worth at least 500 million.

[yehudi]

Is this a good move or will Dish net work head for bankruptcy also??

[Scott]

BlockBuster was horrible for Hollywood, and horrible for the spirit of free market competition - how many video stores did they put out of business? They censored their movie selections, broke street date repeatedly (yet were seldom fined), while paying their employees next to nothing and staying open on Xmas. Yea, they were a swell company.

[Bob]

So, Blockbuster no longer carries the $1 billion debt it had last year. Is that another way of saying that it didn't pay it's vendors $1 billion that was owed? I've been on the losing end of companies that do not pay their bills. Their executives make out, the vendors lose. It is a shame that companies are allowed to do this.

[Thatwood B. Telling]

The reason Dish's enhanced business model will never work is that Blockbuster's movie catalog is nothing at all like Netflix's. Schlockthruster dealt in big, stupid, popular Hollywood movies and Netflix carries all those, plus almost everything else ever distributed (sans porn, of course). So you can talk all you want about infrastructure, but poor product is what will eventually make the $320 million Dish spent look like money flushed down the toilet.

[Bob]

>>> The saga of Blockbuster should serve as a warning regarding the dangers of ignoring customer service.

Naw, Graz, I don't think Blockbuster's problems are because of poor customer services. I think it is just the luck of the draw in the internet age. The internet has changed everything, including how we view movies. DVDs are out. Internet content is in, and Blockbuster's model is based on the DVD. It they had transitioned to internet downloads, things may have turned out differently; but, that would have meant closing all of their stores.

[dean]

Just what I want...a "cross-marketing and service extension opportunity for Dish Network" every time I rent a movie from Blockbuster. This cross-marketing synergy is obnoxious.

[Scott]

The only reason that company ever stayed in business for as long as they did was because they had a undiscerning customer base - suburban families.

[chad]

more ugly empty stores along with Linen's N Things and Circuit City....ugh....

can you say the US companies just expanded to quickly......what goes up must come down.