DISH Network Corp.
), the second largest satellite TV operator in the U.S. after
), plans to shut down another 129 Blockbuster stores in the U.K.,
thereby taking a pretax charge of $46 million on the latter's
Few days back, DISH Network planned to close down 300 of its
830 stores. So, winding up another 129 stores will bring the
total number of Blockbuster stores in the country to 401.
The stores, which will be closed in the coming weeks are
either underperforming or almost on the verge of their lease
terms. Consequently, the move will help DISH Network to improve
its operating margin going forward. However, the company did not
disclose the store locations that will be shutting down its
Dish Network continues to lose subscribers as they faced stiff
competition from online movie distribution companies like
) and Hulu. Therefore, to counter such challenges, the company
bought Blockbuster Inc. out of bankruptcy on Apr 26, 2011, for
$320 million. The acquisition has not only helped the company to
set a new revenue platform but at the same time has also enabled
Dish Network to expand its huge collection of movies.
When Dish acquired Blockbuster, the video rental company had
about 1700 stores across the US. But ever since its takeover, the
company has been facing intense competition from other video
streaming companies providing cheaper movie download options and
was forced to close down 500 stores last year.
During the last nine months, Blockbuster contributed $817
million revenue, which is just 7.7% of the total revenue
generated by DISH Network over the given period. Moreover,
revenue contribution from Blockbuster continued to decline over
the last three quarters without any improvement.
A continuous loss of subscribers has forced DISH Network to
keep its mounting programming costs under control rather than
passing it over to its subscribers. So, the best possible option
for the company is to trim down unprofitable businesses in order
to control cost.
Currently, DISH Network carries a Zacks Rank #3 (Hold).
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