It's official, Dish Network has officially purchased Blockbuster. They were the highest bidders in a bankruptcy auction where they took control of it for $320 million dollars. Their plan? To give Netflix a run for their money.
It's been weird driving around town recently seeing all these Blockbuster building going out of business. The deal that Dish made includes more than 1,700 Blockbuster stores, and gives it new ways to market its services. It also covers "substantially all of the rental chain's business, and likely gives Dish the rights Blockbuster had to stream movies over the Internet, the Blockbuster brand name and customer lists." Reuters has all the details on what went down and what it all means. One thing is for sure, Dish has some very big plans that will give Blockbuster new life.
The deal follows two others this year led by Dish Chairman and CEO Charlie Ergen that could transform the company into a major provider of on-demand video through its satellite system and eventually over a wireless network for handheld devices, according to analysts.
Dish is expanding its broadband spectrum by acquiring DBSD North America for about $1.4 billion.
Digital set-top box maker EchoStar Corp, where Ergen is also chairman, has announced it is buying Hughes Communications, which Mitchell said could one day provide technology to create a wireless network.
Together, the deals could give Dish the tools it needs to deliver movies to phones and iPads and compete with Netflix, which streams most of its videos over the Internet.
"Young people are downloading increasing amounts of content direct to handheld devices. The iPhone is at the forefront of a new generation of devices that are revolutionary because you don't have to plug them into the computer to receive content," said David Pauker, a turnaround specialist with Goldin Associates.
Dish expects to pay about $228 million in cash to acquire Blockbuster's assets, which as of February 27 included more than $100 million of receivables and cash and a rental library estimated to be worth $175 million.
The money will go toward paying off the company's creditors, which include Icahn and other bondholders as well as movie studios. The creditors are owed more than a $1 billion.
It is a dramatic fall for Blockbuster. Mail-order and then digital competitors have steadily eaten into its business, which at its peak in 2002 had a market value of $5 billion.
This going to get really interesting. I really want to see this blow-up and succeed. What do you all think?