IamLegend

Blockbuster is planning Bankruptcy/Closing Stores:
Please post store locations/closing sales you might encounter
and bargains/discussions.


L.A. Times
After dominating the home video rental business for more than a decade and struggling to survive in recent years against upstarts Netflix and Redbox, Blockbuster Inc. is preparing to file for bankruptcy next month, according to people who have been briefed on the matter.

Executives from Blockbuster and its senior debt holders last week held meetings with the six major movie studios to discuss their intention to enter a “pre-planned” bankruptcy in mid-September, said several people familiar with the situation who requested anonymity due to the sensitivity of ongoing talks.

Blockbuster is hoping to use its time in Chapter 11 to restructure a crippling debt load of nearly $1 billion and escape leases on 500 or more of it 3,425 stores in the U.S. Maintaining the support of Hollywood's film studios during the process will be critical so that Blockbuster can continue to rely upon an uninterrupted supply of new DVDs.

Blockbuster has lost a total of $1.1 billion since the beginning of 2008 and has been severely hamstrung in efforts to grow its business due to interest payments on $920 million in debt. Earlier this month the company announced that most of its debt holders had agreed to a forbearance on interest payments until Sept. 30, during which time it would attempt a recapitalization.

Last week Dallas-based Blockbuster's chief executive, Jim Keyes, came to Los Angeles to hold individual meetings with executives at studios including 20th Century Fox, Paramount Pictures, Sony Pictures, Universal Pictures, Walt Disney Studios and Warner Bros. He was joined by a team of restructuring consultants hired to help turn around the struggling company, along with its senior debt holders who would likely end up owning a substantial portion of Blockbuster following bankruptcy.

Former Sony Pictures home entertainment president Ben Feingold, who is serving as an advisor to the debt holders, was present as well.

Though its plans are not yet set in stone, people knowledgeable about the discussions said the Blockbuster representatives presented a mid-September bankruptcy as the most likely scenario. It would enter what is known as a “pre-planned bankruptcy,” meaning most but not all creditors would be on board ahead of time, including senior debt holders and content suppliers.

One of the primary goals of the bankruptcy process, which the company said it hopes would last about five months, would be to escape costly leases for some of its worst-performing stores. Though Blockbuster hasn’t decided exactly how many locations it would seek to shutter as part of a bankruptcy, executives told the major studios it is looking at between 500 and 800.

Blockbuster closed nearly 1,000 stores in the last year alone, a reflection of consumers’ rapidly declining interest in renting DVDs from retail locations now that they can rent them from ubiquitous kiosks in grocery stores, in the mail, or via the Internet.

If it successfully exits bankruptcy, Blockbuster has told Hollywood studios, it hopes to grow through non-retail initiatives. Kiosk manufacturer NCR Corp., for instance, has already deployed about 6,000 Blockbuster-branded kiosks that, like Redbox, rent DVDs for $1 per night.

The company also hopes to expand its presence in the still nascent digital distribution space, through which a growing number of customers are downloading or streaming movies on computers, Internet-connected televisions, and mobile phones.

Most studios are believed to be supportive of Blockbuster’s efforts, as they want to see it remain in business as a viable competitor to Netflix and Redbox, particularly since the formerly second-largest DVD rental store, Hollywood Video parent firm Movie Gallery Inc., went out of business in April.

But there are still some issues to be resolved, including the company’s desire to continue offering movies from all the studios on the same day they go on sale. Fox, Universal and Warner have all instituted a 28-day window on rentals through Redbox and Netflix.

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.

If the company does not enter bankruptcy, it would need to find a new investor or convince its debt owners to significantly reduce its interest payments for the foreseeable future.

A Blockbuster spokeswoman declined to comment on the studio meetings. In a statement, she said, “The extension of our forbearance agreement is a strong sign of support from our senior secured noteholders as we work toward putting in place a more appropriate capital structure to support Blockbuster’s long-term growth. … Our discussions continue to be productive and we have every reason to believe we will come out of the recapitalization process financially stronger and more competitively positioned for the future.”

Blockbuster stock, which last month was delisted by the New York Stock Exchange because of its ongoing low price and moved to the over-the-counter market, closed Thursday at 11 cents. The company’s total market value is $24 million.

In 1994 it was acquired by former owner Viacom Inc. for $8.4 billion.

--Ben Fritz

That'sAllFolks

The guy who founded the co. sold it off for around 8 billion (I think). He got out at just the right time.

This company should go under. With due respects to those who will lose their job, they charge too damn much for rentals (Min. of 5 bucks for new releases last I saw). They mis-advertise their rental periods (it's not really a 2-day rental) . They also charge unreasonable late fees (why not just make it a dollar or two a day instead of an entire whole week's rental) and many times charge late fees when DVDs are returned near the due time.

I hated CompUSA and was glad to see them go under. Blockbuster is one of those companies I have absolutely no remorse about seeing their demise.

cesidio

Can't argue with anything you said. The side story to this is does chapter 11 turn into chapter 7 and if not will the "sale" prices for the stores that are closing be deals or not. Should have some of the answers in the next 2 to 3 weeks I would think

mike07

They closed the stores near me a long time ago. Good riddance. Oh well, I buy more than I rent anyways.

BuckNaked2k

Ironically, this might actually open up a niche for the return of the Mom & Pop type stores that could actually cater to the more avant-garde film fan.

No more 100+ copies of the latest Shia LaDouche schlock, along with a multitude of video games cluttering up my video store.

yellowlt4

Yes, yes and yes!!

dx23

I always thought that Blockbuster could have saved a lot of money if they stopped ordering those shitty plastic cases that they put their movies in. Instead, they cut corners by firing employees and raising the prices of all their stuff, including rentals. Good riddance, idiots.

Undeadcow

Went in yesterday and was shocked to see new releases going for $3.99 overnight only... psychotic. It is sad they're the only rental store left in town (other than Redbox).

whotony

Except almost all of it is wrong. No where is it said the rentals are 2 days and haven't been two days since around April. All rentals are $5 for 5 days then $1 per day for each day after that.
Everything is checked right up until the moment we close.
This is Corp stores any other prices are likely a franchise.

KrazyJason

Let the feeding frenzy begin.

Joseph B

We haven't had a "walk-in" video rental store available anywhere near us since Movie Gallery "gave up the ghost" in April. So this has been a Redbox and Netflix exclusive area for quite a while now.

The most irritating thing about that arrangement is the recently instituted 28 day exclusive rental period that Blockbuster currently enjoys for certain titles. So I certainly hope that that policy ceases when Blockbuster declares Chapter 13 in a few weeks.

That 28-day exclusive period for Blockbuster has probably hurt national sales of some titles on DVD and Blu-ray.

For example: I use Redbox to sample movies which I consider to be "marginal" for my collection. I considered the recent "Batman: Under the Red Hood" and "Clash of the Titans" to be among those titles. They weren't available for rent via Redbox until just last Tuesday; and I didn't have time to view them until this past weekend. I now consider both of those titles to be "good enough" for my collection and will purchase them on BD. Guess what? They're available for purchase now at discount prices which weren't available 4 weeks ago. So the studios lost money on that deal.

There are other titles which I would never consider purchasing such as "Date Night" which is still not available for rent via Redbox and Netflix. Due to pressure by other members of my family to view this movie, I was forced to rent it via VOD. That cost me almost $6.00 (for the so-called HD version) and will ensure that I *never* purchase that title.

BOTTOM LINE: The 28 day Blcokbuster exclusivity window has been a "lose-lose" for both the studios and the consumer and I hope it's gone when Blockbuster files for Chapter 13.

JAYARE

wasnt blockbuster owned by viacom at one point?

MrSmearkase

According the OP's article, Viacom acquired them in 1994, but I think they bailed in 1998.

CrumpsBrother

Spun-off (but don't know date). But isn't that just a fancy way way of saying "still largest shareholder"?

The Valeyard

As much as it sucks for those losing jobs, it couldn't happen to a more deserving company. I worked at Blockbuster in the mid-90s and left a few months after being promoted to Asst. Manager. One of the worse companies I ever worked for.

Chrisedge

I hate them...see sig

drmar35mm

I would miss the DVD sales, which provide recent titles at reasonable prices. But life will go on...

pcdoctor

Ditto!

newginafets

they have 5 for $20 again now, and some used blu rays for $6.99

Alan Smithee

What sales??? And I'm not talking about previously viewed, used and abused.

Steve

I get a lot of recent films via PVD at BBV. Spending $4 for a rental copy is fine by me, and I have seen a lot of great films that way.

blinkangel44

Anyone know if this is at all locations? I figured they'd do it again for Labor Day weekend and haven't bought any since the last sale, but I've been getting pretty anxious! I have my eye on some newer releases that I was hoping would drop to $9.99 but I'd be content with getting them 3 for $20.

jpb07

If you're curious if it'll be sooner rather than later, ask your store. I was told a few months ago that they are prioritizing stores who's leases are expiring. Our local stores don't have there's up until late next year so I'm guessing they'll be getting a lot of the closing stores' stock and then dumping it over time.

wm lopez

Which would mean mom & pop can carry porn.

REPENT

.good riddance to blockbuster..their high prices in the middle of a recession is ridiculous..i only rent at redbox anyway...