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Blockbuster offers $700 million for Hollywood Video

Old 11-11-04, 09:00 AM
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Blockbuster offers $700 million for Hollywood Video

Blockbuster offers $700 million for rival

DALLAS - Blockbuster Inc. has offered $700 million for rival Hollywood Entertainment Corp. in a deal that would extend Blockbuster's position as the world's largest movie rental company.
Blockbuster said in a news release Thursday it has "expressed an interest" in acquiring Hollywood Entertainment for $11.50 per share, a 17 percent premium over Hollywood Entertainment's closing price of $9.80 on Wednesday.

In addition, Dallas-based Blockbuster would assume about $300 million in Wilsonville, Ore.-based Hollywood Entertainment debt in the deal.

Blockbuster said that while it has communicated its interest to Hollywood Entertainment, there hasn't yet been a substantive discussion on the terms.

"We believe this proposed transaction better positions Blockbuster to compete in the rapidly changing home entertainment marketplace, while simultaneously benefiting consumers as well as Blockbuster and Hollywood Entertainment shareholders," said John Antioco, Blockbuster Chairman and CEO.

Hollywood Entertainment owns and operates more than 1,920 Hollywood Video superstores and 600 Game Crazy specialty stores. Blockbuster has about 9,000 stores worldwide.
Old 11-11-04, 09:01 AM
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Is 700 million a bargin? Just kidding....this really belongs in the store forum.
Old 11-11-04, 09:10 AM
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I think I hear Pilot circling overhead.

PEACH
Old 11-11-04, 09:14 AM
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I understand this really isn't a "bargin" per say but this COULD be important later on down the road...

Just a little related public service announcement...
Old 11-11-04, 09:19 AM
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Monopolies bad, competition good
Old 11-11-04, 11:15 AM
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Yes... Corprate America at it's best...

Blockbuster, financially taking it the shorts, stock is being crushed.

Hollywood Video, financially taking it in the shorts, stock is being pummled.

Soltution? Blockbuster buys Hollywood, and blames the aquisition for all of thier financial and internal problems the next few years.

Recent examples? Best Buys disasterous aquisition of Suncoast et all, which has been sold off. Better yet, the infamous AOL - Time Warner merger.

While the FTC stopped Blockbuster's previous attempt at buying Hollywood Video, due a monopoly of the rental industry. This one won't be stopped because both companies are re-positioning themselves as sell-through companies, which would make them approximately 20% of the market.

Good luck... Good riddance.

fitprod

Last edited by fitprod; 11-11-04 at 11:17 AM.
Old 11-11-04, 11:29 AM
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Sell-through? What do you mean by that? My local HWV's have severely cut back on all new DVD sales, they've reduced their inventory to nothing more than just the current big hits, they won't even take special orders.
Old 11-11-04, 12:19 PM
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What coupon code did they use?
Old 11-11-04, 12:31 PM
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Hmmmmm?

I'm sorry but $700 million is not a dvd bargain.
Old 11-11-04, 12:39 PM
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Re: Hmmmmm?

Originally posted by hurricane
I'm sorry but $700 million is not a dvd bargain.
I'll start a thread..."Best Price for Hollywood Video" or just use my BB trade-in credits and buy it that way.

Ron
Old 11-11-04, 12:55 PM
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block it
Old 11-11-04, 01:14 PM
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Re: Hmmmmm?

Originally posted by hurricane
I'm sorry but $700 million is not a dvd bargain.
It is when you are talking about acquiring 350 million DVDs. Thats only 2 bucks a DVD. Way to go BlockBuster.
Old 11-11-04, 02:02 PM
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God, I hope not.

I dont want to go to Blockbuster. They are to me of the video business what AOL is of the online market. Nasty service, cheap tactics, and high prices.

My favorite scam i when you put a movie in the slot on time and then still charge you for a late fee.

Thank goodness for Netflix and online rental services nowadays if need be.

I use Hollywood Video because it's right up the street and rentals are only $2.50 for NR. Blockbuster is also in the area and charges a lot more.
Old 11-11-04, 06:10 PM
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Blockbuster
Old 11-12-04, 12:13 PM
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Bad news. These are the only two video rental stores left in my area (Nasau, Long Island). Is this likely to happen or is it hot air?
Austin
Old 11-12-04, 01:09 PM
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Blockbuster has been very agressive in the press claiming that it will survive the death of rental by becoming a destination for sell through. (Yep, pretty much everyone is laughing thier ass off at that claim.)

Hollywood Video has most likely cut back on doing sell-through and special orders to improve their books for any potential buyers. As it is, this proposed deal is worth about $ 1 Billion dollars, since Blockbuster would assume $ 300 Million in debt from Hollywood.

I missed this when I first read the article, but apparently a major reason for Blockbuster's interest in Hollywood is their Game Crazy stores. Blockbuster has really struggled in the video game rental market, while Game Crazy is one of the few things that worked for Hollywood Video the past few years.

This deal is still in the early stages, so the aquisition is not set in stone. But considering that Hollywood Video's been on the sales block much of this year, and this has been the best offer, it will likely happen.

fitprod
Old 11-18-04, 11:53 AM
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Well, claiming that GameCrazy is the only thing that has worked for Hollywood isn't exactly accurate . . . GameCrazy, while a proven concept (see GameStop, EBGames, Game Exchange, or countless others), is in itself a mirage . . .

Let me pull back the curtain a little more (pay no attention to Mark Wattles back there) . . . While GC and Hollywood are technically seperate companies owned by Hollywood Entertainment, the bulk of GC's overhead bills are written off to Hollywood's side. GC stores have no rent overhead, that is entirely paid for out of Hollywood's bank. GC stores contribute NO money towards utility bills (other than their phones), that is also entirely paid for by Hollywood. Construction costs? Well, technically it IS a remodel for the Hollywood store, so they can pick up the majority of that tab as well. Internally there is a lot of animosity between the two.

Isn't it amazing that GC has been so "wildly successful" while HV has been dropping through the floor? How successful would a GC store be if they had to actually pay bills? It is a shell game where the peanut is wads of cash and the shell is home entertainment companies.

As for Blockbuster buying Hollywood, flee said it best "Competition good, monopoly bad." Speculation that the deal will be looked at as "retailers" vs. "rental" is probably not accurate. The rental market still exists and Blockbuster cannot claim otherwise due to the new "online rental war." In order to do so would shed further negative light on Blockbuster. Sure, it has caused Blockbuster to loose some market share, but not enough to warrant approval of this merger.

As for Hollywood's problems . . . I don't buy any of the talk of the economy, the rental market disappearing, etc. Look at Mark Wattles as the source of their problems. Poor management will bring anybody down.

Here is an interesting scenario to pontificate . . . does Netflix have the resources to make a bid?
Old 11-18-04, 12:05 PM
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Hope it doesn't happen. Only time I rent at either place is when Hollywood mails out there rent up to 3 movies for 99 cents each coupons 2 or 3 times a year.

I doubt blockbuster will keep sending those out.
Old 11-19-04, 11:32 PM
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Local Blockbuster just raised their rental rates by 10%...and I was told "lack of competition" was the corporate reasoning for the increase. Seems the FTC is looking out for us just as well as the FDA (and don't start me up on the FCC.)
Old 11-21-04, 11:36 AM
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Originally posted by RonBoster
Is 700 million a bargin?
It is if they figure in my late fee balance.
Old 11-24-04, 08:38 AM
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Originally posted by RevKarl
Local Blockbuster just raised their rental rates by 10%...and I was told "lack of competition" was the corporate reasoning for the increase. Seems the FTC is looking out for us just as well as the FDA (and don't start me up on the FCC.)


Boy they are following the Toys R US management style, price yourself out of the market and then you can blame Walmart when you fail.
If both of these places offered $1-2 rentals and monthly clubs (BB has started a year too late) and include both/either movies and games for the monthly fee would help. But now it may be too little too late.
Old 11-24-04, 12:36 PM
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I have heard that Movie Gallery is now entering the bidding . . . I haven't seen a story confirming that though. I think that they owuld make a pretty good fit from the limited exposure that I have seen of them -- pretty similar merchandising, service, etc. (Now if MG would just figure out that PVs aren't worth $15 a piece.)
Old 11-25-04, 04:17 PM
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That's just great. I hate Blockbuster as much as I hate Wal-Mart.

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