Looks like Blockbuster is going to rent its last overpriced video soon......

[marmar]

from 24/7WallStreet:



Blockbuster Can’t Reduce Debt, Faces Bankruptcy
Posted: May 26, 2010 at 2:22 pm


When Blockbuster Inc. (NYSE:BBI) filed its 2009 annual report in March, it included the dreaded “going concern” sentence, indicating that it needed to boost its operating income and restructure its debt. Its first quarter report, released on May 13th, did not push the company’s operating income into positive territory and the debt restructuring didn’t happen although total debt fell by $44 million. Blockbuster has suffered stiff competition from kiosk rental stations from Redbox and mail delivery company Netflix, Inc. (NASDAQ:NFLX). Online streaming is also threatening to make Blockbuster’s brick-and-mortar stores even more of an albatross than the stores already are. The major threat here is Wal-Mart Stores, Inc. (NYSE:WMT), which recently purchased a streaming video company and is no doubt gearing up to launch its own streaming service.

Now, the company is fighting with bondholders over terms for restructuring Blockbuster’s debt of about $900 million. The dispute, according to The Wall Street Journal, involves a group of bondholders who are willing to eliminate $300 million in debt for a “lion’s share” of Blockbuster’s new equity. The sticking point is that the group is willing to invest $30 million in new money in the re-tooled Blockbuster, but Blockbuster wants $100 million.

The company is also negotiating with bondholders who are owed around $630 million, trying to get the creditors to cancel $20 million in quarterly amortization payments. Apparently, these bondholders, who are senior to the other group, want their “lion’s share” of the company as well in exchange for eliminating these payments.

A third option is that NCR Corp. (NYSE:NCR) would save the day with an investment in Blockbuster. NCR makes the video rental machines for Blockbuster, which has installed more than 4,000 of the machines as of the end of the first quarter. NCR has offered no comment on the idea.

Blockbuster is also the target of an angry shareholder who is putting himself up for a board seat. The shareholder, Gregory Meyer, owns 620,000 shares of Class A common stock (0.44%) and 25,000 shares of Class B common stock. Blockbuster issued a statement this week saying that electing Meyer “would be a mistake.”

It wouldn’t be the first mistake that the company’s shareholders have made. Blockbuster shares are trading today at $0.35. Tell me that’s not the result of a series of mistakes.

-- Paul Ausick


http://247wallst.com/2010/05/26/blockbuster-cant-reduce-debt-faces-bankruptcy-bbi-nflx-wmt-ncr/

[muntrv]

1. The internet and on-demand are making video stores obsolete.

[Tempest]

3. DVD sales as well

But without a doubt NetFlix is strangling Blockbuster. Blockbuster's answer to NetFlix bombed and there was no plan "B".

NetFlix still grew during the recession.

[razorman]

4. Redbox is great, too. Before the Blockbuster in my town closed,

I was actually able to buy some titles at other stores for only a couple of bucks more than Blockbuster's rental fee.

[brendan120678]

14. I love RedBox...

Especially since I can browse online what's available at the different kiosks around town.

I also like being able to reserve the DVD ahead of time, so that I know that the film that I want to see will be available when I get to the kiosk.

[razorman]

22. I like the fact that you are not paying for several days rental

if you can watch the dvd in the first evening, then return it.

[Statistical]

6. Blockbuster response to Netflix only bombed because of corporate decisions.

When they first launched it they price was less than Netflix plus you could exchange movies at the store.
That made it cool if you wanted to see a particular movie that weekend and didn't want to wait for the mail.

Then corporate changed the pricing (more expensive), made the in store exchanges a premium service (double normal price).

They killed it by trying to jack prices too high and they jacked prices too high because they were worried about their online rentals killing their stores.

Well now their stores are dead anyways.

Blockbuster had a chance to be the "Dish network" to Netflix "DirecTV". The market is large enough for 2 players but they killed it and now they have no hope.

[Green_Lantern]

18. Blockbuster's mailers didn't bomb...

I still use it.

[razorman]

23. I used it for a while, but Blockbuster kept changing the terms.

Then, my local store closed, so I had no place to exchange the dvds.

[Green_Lantern]

24. that's a coincidence...

I was just saying this morning that if my local Blockbuster shut down and I couldn't exchange dvds I'll go back to Netflix.

[razorman]

25. That's what I did. With the online movies available now,

Netflix is much better. Cheaper, too.

[tularetom]

2. I'm going to buy one share of Blockbuster stock

So I can cast my proxy vote for Mr Meyer for a seat on their board.

Apart from all the other fuckups Blockbuster has made, I remember their little censorship gambit back in the earoly 90's.

[arcadian]

8. censorship gambit?

Refresh my memory

[tularetom]

10. Running late but here's a pro-Blockbuster blog denying any censorship

However, where there's smoke, ya know. The rumors have been out there for years.

The comments are interesting.

[HopeHoops]

5. If they would just wall-off part of the store and rent/sell porn videos they would be in the black.

That's what created the home video market in the first place.

[Statistical]

7. Have you heard of the internet? It isn't 1980 anymore.

[meow mix]

9. what, my parachute pants are out of style?

damn

[cbdo2007]

11. Won't they just reorganize after the bankruptcy?

So I wouldn't say they're renting their last video anytime soon. They'll probably just go bankrupt to wipe out their debt, close most of their current stores and focus on the Netflix type part of it - on demand and ship to home.

See the problem with Blockbuster was that Netflix came along with a better idea and could start up from scratch. Blockbuster wanted to get into that market but had this burden of thousands of stores and inventory - bankruptcy will give them a rebirth with a shitload of inventory and store property in the bank already. It may not be a bad investment really...

[Green_Lantern]

19. people just misunderstand bankruptcy.....

They think it means a company is shutting down.

[ThomThom]

12. Well that is capitalism working it's magic. Blockbuster is blockbusted

They couldn't keep up with change so they die, rules of the game. Say bye bye.

[cbdo2007]

13. As opposed to what, just going on forever bleeding money?

That wouldn't and shouldn't work in any financial system.

[Name removed]

15. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Cresent City Kid]

16. Good riddance.

I can understand needing a credit card to rent a car, but a fucking movie? I guess I'm just bitter over my experience of telling my five year old we couldn't rent the movie he wanted even though I had the money because Blockbuster thought we were going to steal it. I know they have to cover their ass, but they could have thought of some way to do it other than just saying "fuck poor people."

I wish I could have managed to become one of the bondholders they owe money. I wouldn't get paid back, but I would have great fun demanding cash fucking money, "your check's no good here!"

[Statistical]

17. Then you wouldn't get paid.

Debtors have no obligation to pay you in cash.

They issue you a check, you choose not to cash it you chose not to get paid.

[gmoney]

20. Yeah, that was an outdated policy...

It used to be that videotapes for the rental market cost around $100 each, so if someone wanted to take home 3 of them, it was understandable that they'd need some sort of deposit.

Not sure if they still require that since videos are now so much cheaper.

[intheflow]

21. I stopped using them in 1997 when

they tried to charge me $67 in overdue fees for a video that I found which had fallen behind the tv set. To replace the video--a crappy movie called Harley Davidson and the Marlboro Man--would have cost them about $9. Needless to say, I didn't pay their ridiculous late fee and I never rented from them again when I had been renting 2-3 videos a week from them at the time. No wonder they've lost income!