Re: CC declares bankruptcy

They're back and yet, they closed the store that was nearest to me...go figure that one out.

mvckalel... if you had been keeping up with the new CEO of Blockbuster the past few quarters, he has led the company to close some unprofitable stores (including those that were also quite old and no longer in prime locations), and promote the online rental business more, as there's less labor costs in online operations than the B&M stores (labor, rent, utilities, maintenance etc). Look for other major companies with many retail stores (Starbucks?) to also close locations that are unprofitable, or produce less profits than desired, now that we are in a softer economy. Also more bankruptcies.

** BREAKING NEWS **

> Major Blockbuster stockholder CARL ICAHN may buy Circuit City - announced this morning...

Richmond, Va. — Under pressure from majority shareholders, Circuit City has agreed to open its books to would-be buyers Blockbuster and, possibly, Carl Icahn, and has added Mark Wattles’ three board nominees to it own directors’ slate.

Circuit City had previously resisted Blockbuster’s $1 billion-plus buyout offer, citing its questionable financing. But in a statement released this morning, the CE chain said it had received a letter from Icahn, the billionaire investor and Blockbuster director, indicating that he would be willing to buy Circuit City if the video rental chain is unable to.

Separately, Circuit City said it has accepted Wattles’ three board nominees to avoid a proxy fight. At least two current directors will either resign or decline to stand for re-election.

So Circuit City is now feeling the pressure. I still don't know if it would be a good move for Blockbuster to buy CC (and increase their debt lload). It's best to let Icahn, who's very wealthy, personally arrange the financing and take controlling interest. (my opinion)

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-JIMI McLovin (the Voodoo Child)

To piggyback on what Mr. Hendrix said, Blockbuster is trying to reinvent itself as a one-stop entertainment convenience store, similar to what James Keyes (IIRC) did with 7-11. They're bringing in more sell through material, more concessions and whatnot.

I've never been sure as to why Blockbuster wants CC. Unless, like has been speculated here before, it is to close a majority of stores, sell the property and use the name to combine the sell-through market with rental. I don't remember where I heard this, but I seem to remember one of CC's problems is their mall front locations. As in, the leases on the stores residing in a mall as opposed to BB who is generally a standalone place.

But, can a combo deal of CC/Blockbuster compete with the Wal Mart's, Best Buy's or internet's of the world? Sell through discs are always more expensive at those two stores than anywhere else. It goes for food, too. 97 cent Raisinettes as opposed to $1.50 candy? Um...no.

Jason, not a finance major

Hendrix, there is no reason for me to be keeping up with Blockbuster's CEO...

OK myckalel... I was just making a simple comment based on your statement - "They're back and yet, they closed the store that was nearest to me...go figure that one out."

Well, I'm helping you to "figure it out" (hehe).

Forget about the CEO for a moment... Blockbuster (the company) is streamlining their operations - and it's working - as the recent financial report indicates. They are #1 overall in rentals (online and store rentals combined), but still significantly TRAIL Netflix in online customers (w/Netflix having twice as many customers, I think, 7 million to 3.25 million). But Blockbuster has started 'turning the corner', and is moving to more profitability, and part of the key is closing some of the stores (and saving expenses) that are unprofitable.

Look at one of their competitors - MOVIE GALLERY/HOLLYWOOD VIDEO - having now gone thru two bankruptcy reorginizations, closing hundreds of locations (for both chains), also recently closing and now trying to sell the Movie Beam rental service for $1 million (despite having spent $10 million a year ago to buy it!!)... and STILL the company is losing money fast, major red ink, and may go out of business SOON.

I like keeping up with the news (The Wall Street Journal is my fav), and so the above ^ is my way of publicizing the current financial reports.

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-JIMI McLovin (the Voodoo Child)

LH, do you think the 'going to Blockbuster or Hollywood Video for renting DVDs' will be dead pretty soon?

I mean, around were I live (south Texas), there's a lot of piracy, so it could be a factor, but I don't think the same thing applies to the rest of the country. It has actually been a while since I visited Blockbuster (maybe more than two years I think)...and yet I've had the thought since a couple of months ago to begin a Netflix subscription, so that I can actually have a 'queu' and have all those good movies that all of you always talk about...

mvakalel... to be brief, both Netflix and Blockbuster provide excellent service with their online rentals, and as I've said previously, I lean toward Blockbuster because of free in-store rentals when I return my online discs -there- (instead of mailing them back). And now the local stores have Blu-ray titles in stock, so I get some free hi-def rentals.

As for the 'rental store' concept itself, most of the mom and pops are long gone, although some large single location, specialty stores still remain (in both large cities, and some regional areas, where there is no Blockbuster to rent from). Yes, some of the Blockbusters themselves are losing business in-store, and that's why the company is closing those that are unprofitable (saves much revenue), and suggesting customers migrate to the online service.

And both Netflix and Blockbuster will increase their 'download/streaming' usage by customers in the coming years (each has a streaming service), for those wanting this option - however, image quality is nowhere near like HD, nor even DVD.

Sorry, I don't keep up on piracy much, but I know it's a problem for Hollywood, and is getting worse. Hollywood studios are now adding that 'Digital Copy' to their new releases, in an effort to entice some away from the temptation to illegally copy discs.

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-JIMI McLovin (the Voodoo Child)