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.]
-- Ben Fritz