Blockbuster Sets Date For Its Bankruptcy
According to The LA Times, Blockbuster and its biggest debtors have already discussed their plans to declare bankruptcy by mid-September with Fox, Paramount, Sony, Universal, Disney and Warner Bros.
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.
Blockbuster’s bankruptcy looks like it’s going to be something of a tangled mess of retail vs. Hollywood vs. digital connections.
It’s in Blockbuster’s interest to stay as chummy with the studios as possible, in order to claim their few slight advantages over non-retail distributors like Netflix or Redbox: the rights to rent a movie as soon as it comes out. Currently the studios require such services to wait 28 days before renting new releases (usually in exchange for the rights to streaming downloads). The studios have an interest in accommodating Blockbuster because competition in the rental video market is good for them, and there’s been less of it with the folding of Hollywood Video and the dominance of Netflix. The studios want companies that will compete to pay them the most for DVDs and digital rights.
Ultimately, the losers in Blockbuster bankruptcy are their smaller debtors (the ones who didn’t get invited to the meetings), any landlords who own one of the 500-800 stores that Blockbuster plans to close, and the employees of those stores.
As for you, the consumer, you might want to keep an eye on your local store. If it closes, there’s going to be some sweet, sweet cheap used DVDs available. Godspeed.
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