2nd UPDATE: Blockbuster Inks Deals With Studios; Restructuring Talks Continue
April 06 2010 - 11:34PM
Dow Jones News
Blockbuster Inc. (BBI) said it inked two more deals with movie
studios securing rights to rent movies from its stores and by mail
the same day they are released for sale on DVD.
The deals with Twentieth Century Fox Home Entertainment LLC and
Sony Pictures Home Entertainment Inc. provide what Blockbuster late
Tuesday called "new enhanced payment terms to Blockbuster."
Like a similar deal with Time Warner Inc.'s (TWX) Warner Bros.
announced March 22, the new agreements ensure "a steady supply of
top-rated movies" for Blockbuster, the movie-rental giant said in
press release.
Rivals Netflix Inc. (NFLX) and Coinstar Inc.'s (CSTR) DVD-rental
kiosk operator, Redbox Automated Retail, haven't reached similar
agreements to date, and Blockbuster is hoping that will give it at
least a month of exclusive access to studios' top movies, including
Twentieth Century Fox's Avatar, due out April 22.
In exchange for the new payment terms, Blockbuster said, the
studios were given a first lien on Blockbuster's 459 stores in
Canada and related assets. Blockbuster's Canadian stores will
continue to operate as usual, the company said.
Twentieth Century Fox is owned by News Corp. (NWSA), which also
owns this newswire and The Wall Street Journal. A spokesman for
Twentieth Century Fox declined to comment, and representatives for
Sony Corp.'s (SNE) Sony Pictures Home Entertainment Inc. couldn't
be reached immediately for comment.
Blockbuster wouldn't provide details on the new terms but said
the deals affirm its "strong and collaborative" business relations
with the critical vendors and will "help Blockbuster continue the
recapitalization initiatives already underway."
Earlier Tuesday, Blockbuster Chief Financial Officer Tom Casey
said the company is "having the right dialogue with the bondholders
and other interested parties" regarding its possible
recapitalization.
"I think it's fair to say the process is going as well as could
be expected at this time," said Casey, who is also executive vice
president, in an interview.
Blockbuster has said options under discussion include modifying
terms of its senior notes and the possible swap of senior
subordinated debt with class A shares. The company has said an
exchange could be implemented in the late second quarter or early
third quarter.
Casey declined to provide details on current talks or offer a
timeframe for any resolution. Similarly, he said Blockbuster
continues "to feel good about the process" of its efforts to sell
international assets, offering no further update.
Casey indicated Blockbuster's vendors continue to back the
struggling movie-rental giant. "We're pleased with the support of
our studios and vendors," Casey said, declining to elaborate.
His comments come the same day Blockbuster filed details for its
annual meeting, scheduled for May 26 in Dallas. Shareholders at the
meeting will be asked to approve a conversion of class B shares
into class A shares and to approve a reverse stock split.
In its filing with the SEC, Blockbuster also said it had
received notice on Feb. 25 from a shareholder indicating his
intention to nominate himself for election to the board at the
annual meeting. Casey declined to identify the shareholder but said
the company would respond appropriately.
"We certainly take any shareholder proposal seriously, but
frankly what we're focused on mostly is the recapitalization and
all of the parts of that and continuing to drive the business," he
said.
Blockbuster said in the SEC filing that if the nomination is
presented properly at the meeting, management proxy holders intend
to vote for the board's nominees and not the shareholder nominating
himself.
Blockbuster is struggling to turn around its declining rental
business at stores, fend off competition from Netflix and Redbox,
and push its own new distribution channels. But
weaker-than-expected fourth quarter results took a bite out of
cash, and the company last month warned it may have to file for
bankruptcy protection.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com
Blockbuster (NYSE:BBI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Blockbuster (NYSE:BBI)
Historical Stock Chart
From Jul 2023 to Jul 2024