Dish Network Corp.
), the second largest satellite TV operator in the U.S., has
found a buyer for its ailing subsidiary Blockbuster UK, within
two months from the time it filed for bankruptcy in Jan 2013. The
DVD and games rental store company was struggling amid stiff
competition from online video streaming companies.
Leverage buyout (LBO) firm, Gordon Brothers Europe, has agreed
to take over the struggling retailer but has not declared the
acquisition price. Per the agreement, the LBO firm will keep 264
blockbuster stores, saving almost 2,000 jobs in the process.
Gordon Brothers plans to retain the Blockbuster brand after the
acquisition and has got a profitable portfolio of stores to turn
the company around.
Dish Network took over Blockbuster Inc. on May 2, 2011, for
$320 million. The acquisition enabled Dish Network to offer
several movie streaming services over the Internet, thus
efficiently countering the competitive threats from cheap online
movie distribution companies like
), Hulu among others.
When Dish acquired Blockbuster, the video rental company had
about 1700 stores across the U.S. and 528 stores in the UK. But
ever since its takeover, the UK subsidiary of Blockbuster has
been struggling against increased competition from supermarket
chains like Tesco and download sites like
) iTunes. In an attempt to tide over the difficult situation the
company closed nearly 200 of its 528 UK stores and has sold 49
stores to the supermarket chain, Morrisons.
Though Blockbuster registered a 21% annualized revenue growth
in 2012, its operating loss climbed to $31 million as compared to
an operating income of $16 million in 2011. The buyout will be
beneficial for Blockbuster UK as the LBO plans to make a
substantial amount of investment in the stores to return to
The transaction is beneficial for Blockbuster as a new
management could bring in fresh ideas to turn around the
struggling DVD rental business. However, for its survival we
believe Blockbuster needs to come up with a cost-effective and
convenient plan of renting DVDs to vend off competition from
Dish currently carries a Zacks Rank #3 (Hold).
APPLE INC (AAPL): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
NETFLIX INC (NFLX): Free Stock Analysis
To read this article on Zacks.com click here.