10 years ago, life was simple in your living room. You really had 3 libraries of content to worry about:
- the 500 channels of content you were receiving from your Cable, Telco, or Satellite provider,
- the collection of DVD’s on your shelf, and
- the available plethora of DVDs to rent at your local Blockbuster.
But even simpler then was the fact that there were only a few rights windows, and as a consumer, you understood them pretty well:
- Movies came out at the theater first, and then a few months later were available to rent (eg Blockbuster) or purchase (many locations) on the same day.
- A few months after this, they started appearing in your premium TV networks (eg HBO, Showtime).
- A few months after this, they came out on the standard, non-premium broadcast networks.
- BuddyTV let’s you tell it which of several pay TV network operators you have in your house and will ask you for your sign-on credentials for popular subscription services. Then, as you search, browse, or hope to discover content, it will show you the available content, and if available on your set top box (live channel, DVR, VOD) will serve it on your first screen (integration with STBs is great, getting the right device to serve up everything else isn’t easy).
- Matcha takes a slightly different approach and assumes your tablet is your intended viewing device from the start and even plays most content directly after your decision with one-click, but it does not attempt to integrate your local pay TV operator.
- Fanhattan currently has the most extensive list of sources of content, but acts more like a librarian did in days of yore, pointing you to the right service and leaving you to figure out how to get the video content to your viewing screen.
- Vudu is integrating it’s own available library with your Vudu and UltraViolet purchased titles, but no 3rd party service is integrating all of those great “cloud-based” titles you own, and the few apps attempting to integrate your physical DVDs are too painful of an experience to mention.
- Well part of the answer will come from metadata service providers like TMS, FYI and Rovi who will work with subscription and cloud video service providers to be able to serve up better metadata about what is available when and where.
- Part of the answer will lie in the nascent discovery segment where service providers like Digitalsmiths, ThinkAnalytics and Jinni are working to create algorithms that can “see” across multiple content sources.
- Part of this will have to be work delivered by the video aggregation services themselves, allowing 3rd party APIs to query cloud-ownership of your account in addition to the available content for purchase, rental or subscription viewing.
- And finally, the last mile has to be delivered by your 3rd party app or video service provider of choice (assuming your local cable company or iTunes one day start offering you the ability to see content outside their network). The user experience (UX) can make or break any technical solution.
Blockbusterâs continued crumbling and Netflixâs Qwikster debacle boded well for Redbox in 2011, as the kiosk operator rose to be the leader in U.S. physical disc rentals, according to research firmÂ NPD.
Redboxâs rental volume increased 29 percent from 2010, with its overall market share rising to 37 percent in 2011, NPD reports. Blockbusterâs market share fell as the chain closed more brick-and-mortar outlets during the year. Netflixâs share of DVD and Blu-ray rentals for the entire year stood flat 30 percent; however, the company reached a two-year low of 25 percent in the fourth quarter of the year, following the attempted rebranding of its DVD service.
Still, NPDâs Russ Crupnick notes that Netflix is âin the process of shifting customersâ to its streaming service, âso not all of the physical movie rental share drop is a net lossâ for the company.
Total DVD and Blu-ray movie rental volume declined by 11 percent in 2011, according to NPD, while nearly one in three paid movie rentals (31 percent) now come from paid video-on-demand (VOD) options. Netflix remains the dominant provider of paid digital movie rentals, with a 55 percent share as of the fourth quarter of 2011.
For the time being, at least, ârenting physical discs from now-ubiquitous kiosks in grocery stores and other venues has taken the lead as the most popular movie-rental method in the U.S.,â Crupnick said.
NPDâs numbers reflect rentals of movies only (i.e., not television shows or series); VOD data excludes free movies from over-the-top television or cable providers.
The U.S. Postal Service announced on Monday a cost-reduction proposal whereby it would move its First-Class Mail âto a 2-3 day standardâ next spring, likely bringing longer wait times to subscribers of discs-by-mail services from Netflix, Blockbuster, and GameFly.
Yet at least for Netflix, whose DVD shipping centers are located near postal processing facilities, the change would add only a day (at most) to disc delivery times, reports The Street. âA slowdown of first-class mail wonât have much of an impactâ on Netflix, Wedbush analyst Michael Pachter tells the website. âThey are primarily a streaming company,â Pachter adds, âmore so now that they raised prices for their DVD customers.â
Netflixâs remaining discs-by-mail subscribers, Pachter says, âwill tough it out if Saturday delivery is cancelled, or if one-day delivery becomes two days some of the time.â
The Postal Service noted that âthere would be an opportunity for mailers who properly prepare and enter mail at the destinating processing facility prior to the day’s critical entry time to have their mail delivered the following delivery day.â In tandem with the First-Class Mail change, however, the Postal Service is looking to close more than half of its 487 mail processing facilities.
Blockbuster LLC plans to maintain operations of more than 1,500 brick-and-mortar stores nationwide under new contracts with property owners, comprising more than 90 percent of the stores that were offered at the chainâs bankruptcy auction in April.
âBy lowering pricing and offering competitive summer promotions, weâve brought millions of customers back into Blockbuster stores in the last three months,â said Michael Kelly, Blockbuster president, in a statement. âToday, more than 100 million people live near a Blockbuster store.â
The chain had about 1,700 outlets when it was acquired by Dish Network in April. A Dish spokesman tells TheWrap that the chain would be closing about 200 outlets, primarily due to landlords declining to renew store leases. However, spokesman Marc Lumpkin said the company could open new Blockbuster stores, âparticularly in those areas where we wanted to keep stores open but the landlords didnât renew leases.â
NCR Corp. is asking a Delaware federal court to declare that it has a contractual right to continue using the âBlockbuster Expressâ name for its movie rental kiosks, which number more than 9,000 nationwide.
The Blockbuster Express name, design and related trademarks are held by the BB 2009 Trust â an entity that, according to NCR, was not part of Blockbusterâs 2010 bankruptcy proceeding. Following the sale of Blockbusterâs assets to Dish Network Corp. in April, Blockbuster transferred its interest in the BB 2009 Trust to Dish.
NCRâs license agreement with the BB 2009 Trust runs through January 23, 2016, according to a complaint filed by the company with the U.S. District Court in Wilmington, Del. But in May, the Blockbuster trust notified NCR that it was terminating the contract.
NCR contends that Blockbuster has no grounds to end the trademark licensing pact. Moreover, âtermination of the license will work a substantial hardship on NCR,â writes Melanie Sharp, an attorney representing the Duluth, Ga.-based company, in court papers. âNCR has undertaken significant time and expense in establishing and operating kiosks throughout the United States branded with the [Blockbuster] trademarks, and has earned substantial revenues from those operations.â
Blockbuster has yet to respond to the suit.
In one ofÂ its first promotions as a Dish Network subsidiary, Blockbuster is seeking to drive traffic to stores by renewing a 99-cent-per-day rental price for âthousandsâ of titles. The campaign echoes past efforts of the brick-and-mortar chain to keep pace with Netflix and Redbox. Blockbuster also offers customers free movie rentals through July 4.
Settlement of DVR patent litigation between Dish Network and TiVo coincides with the satellite TV providerâs plan to develop a new digital video service under the Blockbuster brand.
Litigaton between the TiVo, Dish, and former Dish subsidiary EchoStar had been ongoing since 2006 (via Engadget). Terms of the settlement include Dish and EchoStarâs payment of $500 million to TiVo, with the parties agreeing to license certain patents to each other. TiVo also will play a role in helping Dish promote the Blockbuster digital video service, according to the Charlie Ergen, the satellite TV providerâs chief executive.
Dish also announced its naming of Michael Kelly, the executive vice president of its commercial services division, as Blockbusterâs new president. Ergen said that Kelly âwas the visionary behind our acquisition of Blockbuster,â which the company completed last week.
The U.S. Postal Service must stop giving âpreferencesâ to the handling of disc mailers from Netflix and Blockbuster over those from GameFly, according to an April 20 decision from the U.S. Postal Regulatory Commission.
GameFly filed a complaint with the commission nearly two years ago, alleging that the Postal Service was hand-processing disc mailers from Netflix and Blockbuster at no additional charge, while refusing to extend the same breaks to the videogame rental service. The Postal Serviceâs policy has proven costly for the Los Angeles-based company. In March, GameFly stated that at its current volume of 1.2 million disc shipments per month, the difference between the rate it paid to mail discs and Netflixâs rate amounted to $730,000 â more than 100% of the companyâs monthly net income.
The regulatory commission has ordered the Postal Service to establish two new rate categories for first-class âround-trip DVD mail,â setting uniform policies for when hand-processing surcharges apply. The Postal Service has 60 days to implement the changes.
With Dish Network working to close its acquisition of Blockbuster by April 25, the company has told a U.S. Bankruptcy Court in Manhattan that it plans to assume leases on more than 500 Blockbuster stores (via The Wall Street Journal). Blockbusterâs post-bankruptcy physical presence could span as many as 1,000 locations under the Dish plan. But even that number would represent a further contraction of the movie-rental chain; at present, Blockbuster operates approximately 1,700 stores.
A U.S. bankruptcy court on Thursday approved the sale of substantially all of Blockbusterâs assets to Dish Network, with the satellite broadcast company pledging to pay creditors of the bankrupt video chain approximately $227 million in cash. Closing of the transaction, which carries an overall value of $320 million, is expected to occur on April 25.
The Wall Street Journal documents how Dish Network prevailed in the 16-hour-long âcage matchâ of an auction for Blockbusterâs assets earlier this week.
Publishers are expressing doubts that Borders can meet the goals it lays out for itself in the restructuring plan that the bankrupt bookseller presented to creditors on Wednesday. Publisher sources tell The New York Times that the realization of new distribution efficiencies and other cost-cutting measures is not enough to restore shipments of new-release product under previous terms.
Meanwhile, fellow entertainment retailer Blockbuster is wending its way through the same Manhattan bankruptcy court as Borders. Blockbuster appears before the court today in a review of the Dish bid. Outside the courtroom, however, one analyst has downgraded Dish Network shares, warning that the Blockbuster acquisition would impact the satellite television companyâs financials. More at The Hollywood Reporter.
Satellite television provider Dish Network submitted a winning $320 million bid for the assets of bankrupt Blockbuster at an auction proceeding yesterday. Dish says in a statement that the company expects to ultimately pay $228 million in cash to acquire Blockbuster, with the transaction closing sometime before the end of June. A bankruptcy court judge has scheduled a hearing to review the bid for Thursday.
Other bidders for Blockbuster were reportedly mulling the liquidation of the company. But Dish views Blockbuster as a âgoing concern,â a source familiar with the bid tells The Wall Street Journal. The pay-TV provider may tap some of Blockbusterâs brick-and-mortar locations to sell satellite service subscriptions, and integrate elements of Blockbusterâs video-on-demand business into Dishâs own VOD offering.
âWith 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,â said Tom Cullen, the companyâs executive vice president of sales, marketing and programming, in a statement. âWhile Blockbusterâs business faces significant challenges, we look forward to working with its employees to re-establish Blockbusterâs brand as a leader in video entertainment.â
Bidders for the bankrupt rental chain include a consortium of senior bondholders, South Korean wireless firm SK Telecom, investor Carl Icahn, and satellite TV provider Dish Network Corp., with the fate of the company in the hands of the auction winner (via The Street). A bankruptcy court approved the bondholder consortiumâs $290 bid in March; The Wall Street Journal reports that the other bids do not exceed $296 million.
The bankruptcy court plans to review the winning bid at a hearing on April 7.
With Blockbusterâs creditors lifting their objections to a sale of the company, a bankruptcy court approved of an auction plan late Thursday (via Bloomberg). The ruling enables Blockbuster to avoid a forced conversion of its Chapter 11 bankruptcy into a Chapter 7 liquidation.
A group of lenders including investment firm Monarch Alternative Capital have bid $290 million for the Blockbuster. The bankruptcy court ruled that others, including Blockbuster senior debt holder (and former board member) Carl Icahn, could bid for the company at the auction, the date of which has yet to be set.
Parties to Blockbusterâs bankruptcy proceeding were given three more hours on Thursday to reach an agreement on the fate of the company, ahead of a court hearing to consider whether Blockbuster should be sold or liquidated.
The hearing, originally scheduled for 10 a.m. today at a federal bankruptcy court in New York, was rescheduled for 1 p.m. after creditors and other parties asked for additional time to negotiate, Reuters reports.
A bid for the company by a group of firms including lender Monarch Capital drew objections from studios, landlords and other creditors, as well as the U.S. Department of Justice. The last-minute talks are an effort to gain creditor support for a sale of the company, according to Bloomberg.
The home entertainment industryâs most vocal executives and analysts continue to promote release windows as a sell-through stabilizer. But some in the business tellÂ The Wrap that the effects of the strategy have proven difficult to measure.
One unnamed studio executive concedes that DVD and Blu-ray sales are fundamentally title-driven: rental release windows are irrelevant to those who already desire to add a hit title such as âInceptionâ to their home shelf. Whatâs more, despite Blockbuster promoting its four-week exclusives in a national marketing campaign, the chain has failed to gain a footing against Netflix or Redbox.
With its reorganization plan foundering for want of cash, Blockbuster Inc. may ask a bankruptcy judge next week to approve bidding procedures for a sale of the company, the Wall Street Journal reports.
Investor Carl Icahn and hedge fund Monarch Alternative Capital â both Blockbuster creditors that were said to have supported the chainâs call for an additional cash infusion in January â are the two leading candidates to purchase the company. The price could top $300 million, plus assumption of liabilities such as store leases.
Blockbuster entered bankruptcy in September 2010; according to the Journal, some bondholders fear the protracted reorganization is reducing the companyâs chances of becoming a bona fide competitor to the likes of Netflix.
Additional coverage at the New York Post.
Several store owners tell of their holiday-season business being up by nearly 15%, as relayed by Ted Engen of the Video Buyers Group trade organization to Home Media Magazine. âFrom our numbers, the buy/sell/trade business is up among our members,â he says.
Indie stores credit the windowing policy of several major studios as having a positive effect during the holidays, even as delayed availability of new releases purportedly curtailed Redboxâs revenue.Â But analysts say that other factors, such as seasonally strong sell-through, played a role.
Blockbuster is asking its bondholders for an additional $200 million to $250 million to fund its post-bankruptcy turnaround, the Wall Street Journal reports. Lead Blockbuster bondholders Carl Icahn and hedge fund Monarch Alternative Capital are said to support the cash infusion. But other senior bondholders wonder whether, as The Street reports, it is time to put the company up for sale.
Amid discussions of Blockbusterâs need for more cash, management is mulling the closure of additional brick-and-mortar outlets â as many as 1,000, according to the Journal.
Blockbuster says in bankruptcy court papers that it will close 72 stores in undisclosed locations by the end of the year, along with another estimated 110 during the first quarter of 2011 (via Home Media Magazine).
The chain operated some 2,800 stores in the U.S. as of early October. Blockbuster aims to renegotiate leases for its remaining outlets to preserve their profitability.
The removal of bonus materials from rental copies of DVDs â an idea that 20th Century Fox began testing on select titles last year, in efforts to incentivize consumers to purchase new releases (via Variety) â strikes some analysts as a reasonable response to the realities of todayâs marketplace.
But while more studios have followed suit in cutting features from rental DVDs this fall, they have come up short in effectively communicating the change to consumers.
Notice is virtually nonexistent at Blockbuster and Netflix, according to anecdotal reports â and renters are not happy. Blockbuster customers renting Universalâs âScott Pilgrim vs. The World,â for example, complain that they had no idea of the DVDâs no-frills nature until reading a menu screen at home (via The Consumerist). Patrons of brick-and-mortar Blockbuster outlets claim that the âScott Pilgrimâ packaging on the storesâ rental shelves advertised the extras.
Netflix, for itself, doesnât promise any features for the âScott Pilgrimâ DVD beyond âcolor; interactive menus; [and] scene access.â But taking a page from the 1997 DVD marketing playbook provides only nominal cover in the absence of some affirmative overture from studios themselves.
Blockbuster says that it has received final authorization from the U.S. Bankruptcy Court for the Southern District of New York to obtain $125 million in “debtor-in-possession” (DIP) financing from certain of the companyâs senior noteholders (via PR Newswire). The financing, BusinessWeek reports, will enable the company to pay studios and fund general operations.
Blockbuster is planning to mount a search for a successor to CEO Jim Keyes once the company emerges from Chapter 11 bankruptcy, according to the Wall Street Journal. Pending approval from the bankruptcy court, the movie-rental chain plans to hire executive search firm Korn/Ferry International to identify potential candidates.
The executive change could come before the end of the year, the Journal reported, citing unnamed sources. But even amidst the search, Keyes, who has led Blockbuster since 2007, would remain a candidate to continue leading the company. A Blockbuster spokesperson told the Journal that Keyes would have âactive participation in any evaluation of potential CEO candidates.â
Korn/Ferry also could seek executives for other positions at Blockbuster as well, as the chain looks to redouble its efforts in digital distribution.
The Christian Science Monitor contrasts Blockbusterâs bankruptcy with the story of several independent video stores throughout the U.S., each of which reports a healthy (albeit admittedly niche) business. Like the handful of record stores still in operation, these video renters have persevered by stocking hard-to-find and out-of-print titles, and focusing on face-to-face customer service.
The co-owner of one such store, Black Lodge Video in Memphis, TN, says that Blockbuster employees âliterally laughed in our facesâ when the store opened its doors 10 years ago. Not that store closures and creditor losses at Blockbuster are anything to laugh about now; but itâs worth noting that the fundamental brick-and-mortar business model is still sustainable on some level.
Key details of the long-expected Blockbuster Chapter 11 bankruptcy announcement:
â˘ Blockbuster says its âpre-arrangedâ recapitalization plan would substantially reduce the its indebtedness, from a current level of nearly $1 billion to an estimated $100 million or less when implemented. All of Blockbusterâs U.S. operations, including its 3,000 stores, DVD vending kiosks, by-mail and digital businesses remain open. But the chain said it âwill evaluate its U.S. store portfolio with a view towards enhancing the overall profitability of its store operations.â
â˘ Studios are among Blockbusterâs top unsecured creditors. They include 20th Century Fox Home Entertainment (with a claim for $21.6 million); Warner Home Video ($19 million); Sony Pictures Entertainment ($13.3 million); the Walt Disney Co. ($8.6 million); Universal Home Studios ($8.3 million); Lionsgate ($7.9 million); Summit Entertainment ($3 million); and Starz Media Anchor Bay Entertainment ($2.8 million). More on this angle at The Wrap.
â˘ NCR Corp., Blockbusterâs partner in 7,000 rental kiosks, reaffirmed its marketing and licensing alliance with the company in a statement (via MarketWatch). âOur relationship with Blockbuster continues and we welcome their âbusiness as usualâ approach in creating demand for convenient access to entertainment,â said Justin Hotard, VP and GM of NCR Entertainment.
â˘ At least one analyst â Wedbush Securitiesâ Michael Pachter â does not hold much confidence in the recapitalization plan. âSo long as [Blockbuster] participate[s] in brick-and-mortar rental, they will have higher overhead costs than Netflix and Redbox, and will be forced to charge more,â Pachter says (via Home Media Magazine). âItâs too late for Blockbuster to revive its online offering, and would take way too much capital for them to compete effectively with Redbox, so I think weâll just see Blockbuster continue to slowly waste away.â
â˘ One former investor intimates that Blockbuster has not heard the last of dissident shareholders, who are now mulling court actions of their own. Blockbuster CEO Jim Keyes, says Niko Celentano, âis the main reason Blockbuster is in this position today due to his denial of being in a business model that did not work anymore.â The Dallas Business Journal has Celentanoâs full statement to the dissident group.
The Wall Street Journal has general details of Blockbusterâs Chapter 11 restructuring plan, which the chain will likely file sometime between today and next week.
As expected, Blockbuster will further downsize its physical retail operations, while stepping up its digital distribution efforts. The Journal, citing unnamed sources familiar with the plan, corroborates earlier reports that Carl Icahn has purchased about a third of Blockbusterâs senior debt â with the billionaire investor planning to return to the companyâs board once it emerges from bankruptcy.
Bloomberg has reported that billionaire investor Carl Icahn, who resigned from Blockbusterâs board of directors in January, has recently purchased about one third of the companyâs bonds. As bankruptcy rumors continue to swirl, Blockbuster faces the Sept. 30 expiration of a second forbearance from its lenders.
NCR has stated it is on a path to deploy 10,000 Blockbuster Express movie rental kiosks by the end of this year. But a recent quarterly report from Blockbuster casts questions on whether the kiosk vendor will reach that number.
Blockbuster said in a June quarterly report that NCR had deployed 6,000 Express kiosks to date, with another 1,500 units planned through the end of the year, according to Home Media Magazine. The chain had previously acknowledged the companiesâ 10,000-kiosk goal in its first-quarter earnings report.
NCR, for itself, sounded a note of caution on its kiosk strategy during its own recent earnings call â telling analysts that it would wait until it hit the 10,000 kiosk mark to determine whether it would press further into physical media rental.
Amidst industry anticipation of Blockbuster filing a âpre-planned bankruptcy,â the beleaguered video chain said in a regulatory filing that its CFO and EVP, Thomas Casey, had left the company as of Sept. 11. Casey is succeeded by Dennis McGill, who most recently was CFO at automotive/waste management company Safety-Kleen Systems. (Safety-Kleen is headquartered in Plano, TX, suburb to Blockbusterâs home city of Dallas.)
Late last month, the Los Angeles Times reported that Blockbuster was discussing with studios its intention to file in mid-September for a bankruptcy that has been âpre-plannedâ with the companyâs senior debt holders.
A woman who rented five DVDs from a Redbox kiosk in 2008 proposes to lead a class action lawsuit against the company, claiming that Redboxâs maximum $25 late fees are improper. In their latest filing in a Michigan county court, Redboxâs counsel notes that the woman never paid the late fees on two of the DVDs, and hence has no standing to bring her suit.
Redbox also is seeking to protect some information the plaintiff requested as part of the suitâs discovery process. But so far, the company has been unsuccessful in its efforts to get the case dismissed.
Local Michigan legal journal The Madison/St. Clair Record has details, including efforts by third parties Blockbuster and NCR to quash discovery requests from the class action lawsuitâs organizers.
Executives from Blockbuster have briefed major movie studios on the companyâs plans to file for bankruptcy in mid-September, according to the Los Angeles Times.
The company, struggling under a debt load of nearly $1 billion, aims to secure a steady supply of new-release DVDs and Blu-ray discs through its Chapter 11 restructuring, even as it looks to shutter as many as 800 additional stores, the Times reported.
Initiatives outside the realm of traditional retail comprise Blockbusterâs best growth prospects: under an agreement with NCR, for example, some 6,500 Blockbuster Express-branded kiosks now rent DVDs for $1.00 a night. It its difficult to gauge, however, how long such business extensions will remain on the upswing. NCR itself recently said it would decide whether to press further into physical media once it reached the 10,000-kiosk mark.
Blockbuster has alluded to the possibility of bankruptcy several times this year, having hired hired restructuring advisers inÂ February. The chain reduced its store count by nearly 1,000 in 2009.
Blockbuster reported today (via PR Newswire) a second-quarter loss of $69 million, nearly double its loss from a year earlier. Revenue at the rental chain fell by nearly 20% year-over-year, to $788 million.
Blockbuster also extended a debt-payment deadline to the end of September, giving it more time to develop a recapitalization strategy. However, with more than $1 billion in debt, the company warned investors that it might have to liquidate, according toÂ Reuters. Analysts have stated that a pre-packaged bankruptcy may be the company’s best option.
âLess waiting, more watchingâ is Blockbusterâs latest ad slogan, as the chain attempts to convey its 28-day advantage over Redbox and Netflix — for some new-release movies, anyway — in a new TV campaign. BTIG Researchâs Richard Greenfield applauds the marketing move,Â calling the spot âthe best Blockbuster ad in years.â (It sure beats this one from 2005.) But Greenfield says that with studios such as Disney making movies available to Redbox, Netflix, and Blockbuster simultaneously, âwe find it hard to believe the message will really hit home for consumers.â
As paidContent points out, the 28-day wait for some new releases now in effect at Netflix doesnât seem to have impacted the companyâs subscriber growth. BTIGâs Greenfield notes that Netflixâs DVD rental business historically has been catalog-driven.
As the U.S. Postal Service calls for a postage rate hike and a five-day delivery schedule, analysts are mulling the implications for Netflix (as well as fellow disc-by-mail services Blockbuster and GameFly).
Janney Capital media and entertainment analyst Tony Wible reportedly reiterated his sell rating on Netflix stock in the wake of the Postal Service announcement, estimating that a rate hike could add between $18 million and $30 million to Netflixâs physical distribution expenses in 2011.
Netflix is nevertheless undaunted by a prospective USPS rate increase; it actually supports it, according to Home Media Magazine. And an end to Saturday delivery, Netflix tells The New York Times, is more palatable than a steeper rate hike.
Shortly after the New York Stock Exchange halted trading of Blockbuster shares yesterday, the video chain said it had secured a six-week extension on $42.4 million in interest payments that were due July 1. The creditors hold about 70% of Blockbusterâs $630 million in senior secured debt.
âItâs a foregone conclusion that Blockbuster is never going to repay this debt,” Michael Pachter, a Wedbush Morgan Securities analyst, tells the Dallas Morning News. âWhat the debt holders have to decide is whether keeping the company going will net them more money than if they liquidate it.â
The credit extension is contingent upon Blockbuster’s hiring of a chief restructuring officer next week. As the Dallas Morning News reports, further staff cuts and cost reductions are likely for the company.
Blockbuster said two proposed measures to help keep its shares trading above the NYSEâs required $1 level did not receive enough votes at the companyâs annual meeting June 24.
Gregory Meyer has been elected to Blockbusterâs board of directors, overcoming the objections of pro-management proxy advisory firms who said the dissident shareholder would be âan unnecessary distractionâ to the board. Reactions were mixed among investors on TheStreetâs live forum during this morningâs shareholder meeting. Blockbuster’s stock was down 4% this afternoon, trading at $0.28. The Dallas Morning News has analysis.
Blockbuster, in further efforts to fend off activist investor Gregory Meyerâs campaign for a board seat, says that two additional proxy advisory firms â Proxy Governance and Egan-Jones Proxy Services â have endorsed the companyâs slate of director nominees.
Proxy Governance says that Meyer, despite his video industry experience, would be âunlikely to play well with othersâ on the Blockbuster board, based on his publicly documented correspondence with CEO Jim Keyes and others at the company. Egan-Jones, meanwhile, says that Meyer has not put forth âany alternative strategic course or specific proposal that persuades us he would generate greater value for the shareholders.â Stockholders vote for the new board of directors on June 24.
Proxy advisory firm RiskMetrics Group is recommending Blockbuster shareholders elect activist investor Gergory Meyer to the company board on June 24, in opposition to the video chainâs management. Blockbuster has responded with a recommendation for its own board pick from a rival proxy firm. By AP
Blockbusterâs first quarter earnings report (released yesterday) was in line with analyst expectations, but share prices still fell with bankruptcy remaining a possibility for the chain. The business climate for Blockbuster remained challenging during the quarter, with same-store sales declining 7%. But CEO Jim Keyes speaks of transition in an interview with the Dallas Morning News: the first quarter was âvery important…in terms of crucial steps in achieving a brighter future for the company.â By The Dallas Morning News
Gregory Meyer, who sold his DVDXpress kiosk business to Coinstar in 2007, is waging a proxy battle for a directorâs seat at Blockbuster.
Meyer holds 645,000 shares in the chain â more than any Blockbuster executive, save for CEO Jim Keyes. But Keyes and other top Blockbuster brass reportedly want nothing to do with Meyer, offering up an entertainment-industry outsider as a director candidate.
In a proxy statement to fellow shareholders, Meyer alleges that Blockbusterâs âincumbent Board has presided over a massive destruction of shareholder value that should not go unrecognized.â Blockbuster counters in its own SEC filing that Meyerâs vision for the company is unworkable.
Confiming an earlier report that NCR plans to begin selling DVDs from its Blockbuster Xpress kiosks this summer, NCR Entertainment president Alex Camara tells Dow Jones that the company has not yet signed any agreements with movie studios. âWeâve got the technology down, we’ve got the capabilities to do this,â Camara said. Studios are âvery interested.â
Camara adds that the kiosks likely wonât sell DVDs at the discounted prices that consumers are used to seeing at physical retail. Whatâs more, supermarkets where NCR currently has a kiosk presence may already sell DVDs, which could preclude the company from selling discs from its own machines.
NCR also announced a deal that puts kiosks in 400 Kwik Trip convenience stores across Iowa, Minnesota and Wisconsin. Via The Wall Street Journal
NCR will expand beyond film rentals with its Blockbuster-branded kiosks in July, stepping up competition with Coinstar’s Redbox by selling newly released DVDs, reports Bloomberg.Â The company also is in talks with film studios to offer $2-a-day rentals on new releases through the dispensers, double the current $1 rate. By Bloomberg (via Business Week)
Continuing its efforts to avoid bankruptcy, Blockbuster has secured new payment terms from Sony Pictures Home Entertainment, Twentieth Century Fox Home Entertainment, and Warner Home Video. In exchange, the studios receive a first lien on assets of the chainâs Canada subsidiary. As with Blockbusterâs previously announced rental deal with Warner, Fox and Sony also provide new-release movies for rental via the chainâs stores and by-mail channel day-and-date with the moviesâ availability for purchase. Via PR Newswire
Next to bankruptcy, nothing unsettles investors more than a reverse stock split, which financially challenged Blockbuster says it will present to shareholders at the DVD rental giantâs annual meeting May 26 in Dallas. The news, announced March 29 by CEO Jim Keyes, sent Blockbusterâs penny stock down more than 8% to 25 cents per share in midmorning trading March 30. By Home Media Magazine
While Coinstar and NCR Corp. continue to expand their respective Redbox and Blockbuster Express networks, a new company is looking to claim a piece of the DVD kiosk pie.
Start-up EntertainmentXpress announced March 25 that it had signed a kiosk supply agreement with major Pizza Hut franchisee Aurora Huts LLC. Founded by Pizza Hutâs former chief operating officer, Aurora Huts operates 155 Pizza Hut locations in the region of Pittsburgh, PA.
The deal is the first for the fledgling kiosk network, which aims to become a âsignificant participantâ in kiosk rentals of movies as well as videogames.
âWe believe that this initial agreement with Aurora Huts LLC represents a great beginning to expanding our relationships with other multi-unit, owner operators within the Pizza Hut Franchise Division and in the multitude of other major brand, quick serve restaurants,â says the companyâs Imran Sayeed.
EntertainmentXpress operates as a business unit of Public Media Works, a publicly-traded film and television production company founded by actor Corbin Bernsen. The kiosk vendor did not disclose a timeframe for deployment, the variety of titles that its kiosks would stock, or other details. Via MarketWatch
The new agreement between the studio and the rental chain gives Blockbuster a four-week lead on the likes of Redbox and Netflix for DVD, Blu-ray and digital on-demand rentals. Warner Bros. movies such as âThe Blind Sideâ and âSherlock Holmesâ are being made available for rental at Blockbuster day-and-date with their sell-through release. Via PR Newswire
For the second time in a year, Blockbuster is warning that it may have to file for bankruptcy protection under mounting debt and ever-increasing market pressure from competitors. The Wall Street Journal has a write-up of the details.
In the same round of March 16 regulatory filings as its bankruptcy mention, Blockbuster stated that it is looking to outsource operations at its largest distribution center in McKinney, TX, which employs 910 people and primarily stocks company-owned stores. Details at Home Media Magazine.
Sheetz, a closely held, Altoona, PA-based chain that has marched southward as it expands, is adding the movie-rental kiosks at nearly all 365 locations. The rollout is one of the biggest so far in NCRâs efforts to have some 10,000 kiosks operating by year end through its partnership with Blockbuster. The current number is about 4,000. By The Wall Street Journal
NCR Corp. March 11 said it has upgraded the Blockbuster Express Web site so consumers can now rent online up to three DVD movies at a time and pick up at the nearest kiosk â a first among self-serve vendors. NCR is manufacturing and installing 10,000 Blockbuster Express DVD rental kiosks in the U.S. this year through a license agreement with Blockbuster. By Home Media Magazine
Blockbuster rolls out a new policy this week whereby stores charge customers $1 for each day they keep movies over a five-day rental period. If movies are not returned within 15 days, customers are charged the full price of the movie. âItâs similar to what Redbox does,â says a company spokesperson. By The Dallas Morning News