Blockbuster tells Hollywood studios it’s preparing for mid-September bankruptcy – LA Times http://bit.ly/cktTTb
Coming as no surprise after losing $1.1 billion in the last few years, and after closing 1000 stores, Blockbuster has been caught between business models: streaming and avoiding the store all together, and the Redbox cheap (and in convenient locations) machines.
Blockbuster post bankruptcy plans on increasing “non-store” revenue (streaming and kiosks).
I guess there’s a role for the store in movie rentals? But when Netflix delivers from a selection approaching 100,000 titles, and the average Blockbuster carries just 5000 titles, how can it really compete?
The studios would likely be protected from any significant losses on payments Blockbuster might owe them at the time it files for bankruptcy under the proposed plan. But they would lose revenue from any stores shut down.
The parties most impacted would be Blockbuster’s junior debt holders and the landlords of leases that would be canceled under the proposed bankruptcy. It remains to be seen whether they would attempt to challenge a plan that left them with a fraction of what they are owed.
After delisting the company is worth only $24 million with a massive debt attached.