Blockbuster Tells Hollywood Studios it's Preparing for Mid-September Bankruptcy

[Hissyspit]

Source: Los Angeles Times

Blockbuster tells Hollywood studios it's preparing for mid-September bankruptcy

August 26, 2010 | 3:56 pm
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.

Read more: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/08/blockbuster-tells-hollywood-studios-its-preparing-for-midseptember-bankruptcy.html

[marmar]

1. No surprise.....Blockbuster will soon go the way of Circuit City.

nt

[Hawkeye-X]

2. Go Chapter 7

and die. Thanks!

[onehandle]

3. I've been in a Blockbuster three times in the last year. The population was always...

I was only there looking for used Blu-Ray movies.

[liberal N proud]

4. I threw away my Blockbuster member card year ago

I hardly ever rent a movie anyway.

[d_r]

5. I have two blockbuster stories.

The first one was years ago when I lived in Lansing. MI. I went to blockbuster, and the bill was $4.10. I gave the girl a five, and while she was ringing it up I reached around in my pocket and found a dime. I pulled it out, and said "Oh, I got the dime." The girl just froze and looked at me. I said "You can just give me a dollar in change." She said "I'm sorry, I can't do that." I said "Sure, here's the dime." She said "I can't do that, I already rung up that you gave me 5.00." And I said "but the .10 would just make it an even dollar in change" And she said "it won't let me do that." And she gave me .90 in change.

The second one was months later. I had dropped a movie in the slot to return it on a previous day. I was there to rent another dvd, and the guy told me on his computer that I hadn't returned the last one. OK, somehow that got fixed, but now he was telling me that it was late. He said something along the lines of "I'll let it slide this time, but just don't do it again." I was so pissed off, this kid was totally just calling me a liar, over something in the computer that didn't make any sense. I swore I would never go in a blockbuster again after that. I was really pissed.

We joined netflix about 7 years ago, when my wife was pregnant with our first. We made great use of it during that pregnancy. We had those three dvd's going so basically a new one came in the mail every day and an old one went back. Then that baby boy was born. From that point on, a dvd from netflix might sit there for weeks before we ever watched it. For a while I thought that was bad use of it, that we weren't getting our moneys worth. But actually, it turns out that is just another way to use it, and it is just as good really. When my wife and I do find a night that the kids go to sleep and we are not exhausted, we have a dvd to watch and we don't have late fees because it was sitting there waiting. I'm at peace with it. I think we've worked through our cue so that now we are getting movies from 2006...

I don't want to begrudge any Americans a job, but screw blockbuster, as far as I'm concerned I put them out of business myself it just took 7 years.

[hlthe2b]

7. For a brief while I was very happy with online BB and the store

since one could go into the store, return a movie and get one immediately, while it also triggered for a new one to be sent. I made great use of that plan for a few months, catching up on series tv shows from HBO and SHOWTIME and plenty of older movies I'd never gotten around to seeing. But then they stopped EVER having anything from my cue available, for months at a time, upped their prices, and screwed around with the monthly roll-over dates so often that I know I was constantly getting screwed. I still liked the store though, but it closed 8 months ago or so. Some day I may go to NETFLIX, but for now, I am content to grab the occasional redbox movie and to watch things online where possible. I just don't watch that many movies or tv any more.

Nonetheless, I'm saddened at the demise of rental DVD stores. It was always nice just to go in and browse, since I rarely knew what had come out recently. Oh, well....

They had plenty of opportunities to tinker with their business plan to make it work, but for reasons that escape me, never seemed to do so. I noticed one of the Safeways near me switched out its REDBOX for a BlockBuster box... Yet, I've never seen really recent releases listed in the BB box, like the REDBOXES were known for. So, yet another lost opportunity, it seems....:shrug:

[MattBaggins]

8. As posted above; they will go the way of Circuit City and it's the companies own fault.

I hope the bet for the employees but Blockbuster did nothing at all to keep up with the times and let Netflix clean their clocks.

[Hissyspit]

9. And that's ON TOP of the censoring of movies like "Last Temptation of Christ"

Screw Blockbuster, no matter who owns it now.

[onager]

29. Ha! I have a story about that...

When "Last Temptation of What's-His-Name" came out, I read an article that Blockbuster had bowed to pressure from religious groups and decided not to carry it.

Now I live in Los Angeles County, not East Jesus, Utah. So I was sort of surprised at the ban.

I did know, from a Catholic I was dating at the time, that the Archdiocese of L.A. helped out with some "spontaneous" protests against the movie when it was in theaters. (i.e., about as "spontaneous" as a Nuremberg rally.) And as always, the local Fundies got their panties in a wad about the whole thing.

So I decided to test the ban. Went to my local Schlockbuster and asked the young lady re-stocking if I could rent "Last Temptation."

She looked around furtively and whispered: "Yes, but we keep it under the counter. Not on the shelves. Just ask for it up front."

That's a double or triple level of hypocrisy. But at least it was funny.

[NBachers]

13. Now all you have to do is stay awake during the entire DVD

*snooore* NUDGE Whaahunh? What?? "You were asleep!"

No I wasn't

"Yes you were- again"

Oh- okay . . .

[mike_c]

6. some of my worst video rental experiences EVER were at Blockbuster....

I hope the bankruptcy judge demands that they demonstrate real changes to their business model before letting them off the hook with their creditors. Just letting them wipe the slate clean and then fail all over again won't be much of an improvement. I certainly won't be giving them any more business than I do now, which is zero.

I agree with the DUer up-thread who suggests Chapter 7 and death.

[Skink]

10. Time to pay back for those late fees.

[alp227]

11. Netflix pwns now

Last time I ever entered a video rental store: 2006, when I rented some video games from Hollywood Video. By that time my family had Netflix. Now, the local Hollywood Video is shut down. Of the two Blockbuster stores in my area, one closed and was replaced by a realtor office.

[onehandle]

16. The Netflix app for iPhone came out today.

Pwn indeed.

[mike r]

12. Adapt or die

Another iconic brand name hits the dust.

[ibegurpard]

14. I hate Neflix

It means I have to plan my home movie watching in advance.
And Redbox? browsing for a movie outside in front of a newsaper box sized vending machine? while other people wait? yeah, right...
I'll admit though, I hadn't gone to a Blockbuster for years just because movies come out quickly now and they're cheap and I can just buy them.

[NickB79]

18. Netflix has an impressive streaming movie section now

We use it all the time on our laptops and the Wii connected to the TV, so we don't feel like we have to plan out our movie watching so much.

[Hosnon]

24. Try Netflix again. The streaming has improved to the point that I almost consider the DVDs by mail

as something I just do because it's there.

[JI7]

15. and this time it has nothing to do with the slow economy

i don't understand why they didn't change their business strategy

[superconnected]

17. Remember life time video store memberships back in the 80's?

Block buster was after that. But I remember knowing people who paid $400 for those life time memberships to those little stores blockbuster put out of business. Not sorry to see them go or block buster go. Net flicks will die sooner than later because of cable on demand. (and cable will die soon and be only internet based on demand.) People will just rent through their TV sets then move to renting through their computers(what many of us do now) but they will leave netflicks for net superstores like Amazon that offer more to buy in one spot with that one account(amazon rents videos to watch online now like netflicks. I figure tv stations moving to only web base may take it all over when they go there and let you buy/download books too including play audio books for you and sell eveything else you can get from a dept store(amazon practically does this now though). I already see companies merging on line.

Blu-rays aren't going to last long. Buying physical movies is already a dying practice.

[NickB79]

19. Netflix won't be dying anytime soon

They're already putting more and more of their movie library to video-on-demand, which you can access through your computer, Wii, Xbox 360, Playstation 3, numerous Blueray players, etc. Eventually hardcopy DVD's will go the way of the dodo, and all of Netflix's extensive library will be on instant-queue.

We already rent through our TV sets with Netflix in this way.

[Frank Cannon]

20. Warner just struck a deal to stream more of their catalog on Netflix

I figured that was going to be the hit that ended the ballgame for Blockbuster.

Netflix isn't going away for a LONG time.

[Xithras]

26. Netflix'es biggest danger is RedBox, not online streaming.

The average American broadband streaming speed, as of this year, is still only 3.7 megabit. That's not nearly fast enough to stream Blu Ray quality video into peoples homes (the BD spec itself requires that playback devices support 50 megabits internally).

People may be able to watch regular TV online, but Joe Sixpack still wants to watch his movies with full 5.1 DTS audio, without artifacts, on his big flat screen TV. That won't happen until internet connections speed up. A lot.

[JustABozoOnThisBus]

21. Great, another "fakeruptcy"

just a way to escape liabilities to shareholders, debt-holders, lease-holders.

Legal theft.

K-Mart and General Motors are some big-name pioneers of this practice.

There should be special debtor prisons for CEOs.

:hi:

[KurtNYC]

22. anyone who invested in a store front video rentals in the last 10 years

had plenty of information that there were better investments available elsewhere. Blockbuster peaked in 1996 (when it was bought by Showtime) and it is no secret that in-store video rentals were the walking dead. Blockbuster IS bankrupt.

http://www.theonion.com/video/historic-blockbuster-store-offers-glimpse-of-how-m,14233/

K-Mart filed for protection in 2002 and restructured and they have done relatively well since then. They bought/merged with Sears only 3 years later.

GM makes no profit building cars, their only profitable enterprise is financing.

IMHO the stock market is corrupt to the core but is one way (perhaps the only way) for the little guy to cash in on government bailouts and "to big to fail" corporate welfare. But the DOW is complete BS, and buy-and-hold is for suckers.

And a side note: Never buy the stock of a company who has their name on a sports stadium.

[Hosnon]

25. That's the entire point of a reorganization.

Individuals do it all the time with 13s.

While individual creditors might get screwed, collectively, everyone usually comes out better.

[robcon]

23. It sucks when a company is behind the techological times.

Bye-bye Blockbuster.

[shanti]

27. what took them so long?

when netflix came on the scene, it was only a matter of time. i loooooove my netflix!

[Jimbo S]

28. I always thought Blockbuster to be regressive

Employee drug tests? C'mon, it just young people scanning discs in and out.

Also heard stories of editing R-type movies without notifying consumers.

Never patronized them.