Blockbuster- Good news / Bad News

TheForce

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Yesterday I was at Blockbuster swapping out my usual 2 Blue Ray movies for two more. Blockbuster Movie pass is $32/month for two out at a time. This has been a great savings for me over the past 5 years. It has allowed me to review and watch up to 2 movies a day when I have the time. At a price of now $5 a DVD for rental, that equates to $270 savings. But that does not include games...

So I asked the store manager and he said for an additional $2 a month I can convert my Movie Pass to Movie / Game pass. Well that is a no brainer- I said sign me up! I've been wanting to spend more time with my xbox and PS3 anyway. I've never been into games because they take up so much time but being semi retired now I have more time to enjoy these things. The downside is Games are expensive to buy and the ones I have so far do not seem to be worth the money they get for these games. Being a visual artist, more than a gamer, I get tired of the same scenes and same run punch or shoot activity. Even flying, the world of airspace gets old after awhile so for me to play and try more games is better to my liking than the pride I know some of you get from mastering one game. I may change but for now having access to very low cost large selection of games is just what the doctor ordered! :eureka:

Now the bad news... I get my online market watch news this morning and Blockbuster is planning to file Bankruptcy! Ugh! My great Movie / Game Pass life may soon come to an end. PLus, the financials on them looks so bad, it is unlikely they can escape going out of business. I am saddened by this and will certainly miss going to the store each day and browsing the titles then walk out with two new movies to watch each evening. :sob:
 
meStevo

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Yeah, they've already trimmed so much and yet are still doing so bad, it's quite the downward spiral they're in.

I did get some nice deals from a store that was closing over here though :D
 
Zookster

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I went into a nearby BB for the first time in a while to explore the possibility of renting Assassin's Creed before I play the ACII I just bought. They wanted $9 for a 5 day rental. :eek: Since I could probably buy it used for under $15, I just walked out...or at least I tried. Walking past the counter, some lady working there (probably a manager) tried to upsell me like I've never been before in that store.

Her: "What did you come in here for today?"

Me: "To rent a game, but your fee is too high."

"Oh, well we currently have this special where you can rent two games for 5 days for $15."

"No thanks. Don't have time to play two games in that short time period."

"Oh, well, God of War III is coming out. Would you like to pre-order that?"

...

I kind of felt bad for her because I know BB's situation, and she probably was desparately trying to hold on to her job/store.
 
Scott Greczkowski

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The closed all the Blockbusters around here.
 
MikeD-C05

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I saw in a magazine back in 1990 that said that by the end of 2010 , most if not all video rental stores would go out of business. A victim of new technology. They didn't say what kind of technology , but they look like they were on the money with this prediction.
 
TheForce

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Vurb- BB hasn't filed yet but they announced it just may happen. Recently they lost their letter of credit, the financials show them to be 1 Billion in debt and negative balance sheet. It looks very bad. From my business knowledge they will be required to submit a plan to the courts to qualify for chapter 11 ( reorganization) or the court may just order them out of business. Bankruptcy for reorganization isn't automatic. First and foremost they will need to show they can meet their payroll requirements.

I was talking to the manager recently and he said they are under real strict licensing requirements which prevents them from liquidating much of their rental inventory.

I pulled this today from the trader reports:

At Jan. 3, 2010, Blockbuster had approximately $963.6 million of debt outstanding.

The downgrade of Blockbuster's ratings follows the company's 10-K filing which outlined its initiative to exchange all or a part of its senior subordinated notes for class A common stock. The company may also seek certain modifications to the senior secured notes. Assuming that an agreement can be reached with the holders of the notes in terms of an exchange, an exchange will occur during the latter part of the second quarter or early part of the third quarter of this year. Blockbuster also stated that it is possible that a successful exchange will require the company to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code. Fitch believes the transaction as contemplated constitutes a coercive debt exchange (CDE) which is considered a default as outlined in Fitch's global criteria report, 'Coercive Debt Exchange Criteria', published on March 3, 2009. In the event that a CDE is successful, Fitch will downgrade the IDR of Blockbuster to 'RD' from 'C'. Following the downgrade, Fitch will review the company's credit profile and its modified capital structure and assign a new IDR accordingly. However, if the CDE is unsuccessful, Fitch views the probability of a default or bankruptcy as very high. In such a situation, the IDR will likely remain at 'C' until a default occurs or until the company's financial performance and credit profile improve sufficiently to warrant an upgrade.

Fitch remains concerned about the company's operating model and pressures on its business due to the changing industry dynamics and intense competition from various channels. Given the deteriorating operating performance, Fitch expects credit metrics will continue to weaken in 2010. However, Fitch believes Blockbuster maintains adequate liquidity to make its April 1, 2010 debt payment of $43 million. At 2009 fiscal year-end, Blockbuster had $247 million in cash and cash equivalents, which includes $59 million in restricted cash.

The ratings on the company's $675 million senior secured notes and $300 million senior subordinated notes are derived from the IDR and the relevant Recovery Ratings (RR). Fitch's recovery analysis assumes a liquidation value of $423 million in a distressed scenario. Applying this value across the capital structure results in a rating downgrade to 'CC/RR3' from 'B/RR2', indicating good recovery prospects (51%-70%), for the senior secured notes. The senior secured notes are guaranteed by Blockbuster's domestic subsidiaries and are secured by a first-priority lien on substantially all of the company's and the guarantors' assets such as land, buildings, improvements, equipment, furniture, permits, licenses, subleases, and real estate tax refunds owned by Blockbuster as well as collateralized by pledges of stock of all of the company's domestic subsidiaries. The senior subordinated notes are affirmed at 'C/RR6', reflecting poor recovery prospects (0%-10%) in a distressed case.
 
yourbeliefs

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Pretty much all of these places are going away. Redbox, Netflix, Gamefly, and other On Demand services are basically wiping out these brick & mortar rental businesses.
 
Ramy

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The Blockbuster where I live has never had the newest generation of video games so I haven't been in that store but twice since they first came out, just to check if they had started carrying them and they have not.
 
Heavie

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BB did it to thereselves. When BB was doing good, they was expensive and they hound you. Like a bill collector. When netflix started, I joined them and said good by to BB for good.
 
televisionarchives

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During my travels I've recorded the inside and outside of many video stores including Blockbuster stores . One of my favorites was a place called laserific in Orlando. He started out with Laser Disc and then moved to DVD. Blockbuster put him out of Business. I remember so many Video Stores in small towns. During the 1980's I taped many family owned that ran out of a small garage etc.

I remember when Blockbuster first started with VHS you had to pay something like $90 if you lost the tape or broke it. I can't remember why they charged that much but at the start they didn't even put macrovision on the tapes. That came later and then the price dropped. And even if you returned the tape it was your word against the employees. Remember first they wanted you to rewind the VHS tape, but then many VCR's wouldn't slow down and the tape snapped . So then they told you not to rewind the tape and they did it themselves.

It's never good when so many jobs are lost. The internet has been a blessing in some ways but has also cost many good people jobs. Look at all the empty buildings. It's hard to compete when someone online doesn't have to pay local taxes and utilities. That all goes into the cost of running a business. And many online stores avoid that .

And when the Blockbuster closed near me the Manager gave me many of the items they were going to throw away. Tons of video covers, about 100 PS2 games, name tags, shirts , old promo items, Security Tapes from years ago, etc.
 
meStevo

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I thought it was because back then movies were available for rent well before their retail release, and the cost was much higher when they were sold to rental outlets.
 
televisionarchives

televisionarchives

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I thought it was because back then movies were available for rent well before their retail release, and the cost was much higher when they were sold to rental outlets.
Might be, But I think one reason they sold it for such a high price was so people would just rent it . And if they wanted to own it they would buy it. I know I purchased some at that high price. Another thing I remember is the fights the studios put up over the recordable vcr . It's hard to believe now but Disney and Universal led the way to ban it. Sid Sheinberg was on Nightline one night talking about how recording anything on a VCR from Television was illegal. It's laughable to look at now . I need to find that tape. They didn't want anyone to have a VCR. Sid was head of MCA Universal at the time. I can't remember who was putting up the fight over at Disney . It wasn't Michael Eisner . If I find the tape I will post it.
 
TheForce

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television archives- I'm sure you've been in this for a long time- me too!

I had one of the first umatic VCR's in NY back in the mid 70's and I believe I have the first bootlegged pirated copy of The Devil in Miss Jones, a really bad porn movie. We set up a borrowed B&W TV camera in a theater on 42nd street and the projectionist ran the newly released movie while the theater was closed. I recorded it to the VCR on 3/4 Umatic tape. The VCR is long gone but the tape still plays in my VO-9850 Umatic recorder here in the studio.

Anyway- back to the present-
In reading through the SEC filings, I see that a guy who founded Hollywood Video recently purchased about 22% of the stock in Blockbuster right after it tanked from ~.70 a share to ~.30. His name is Mark Wattles and he resides at 7945 W Saharh Blvd, Las Vegas. meStevo- he is your neighbor! :) The stock has been around that number since, recovering slightly until this latest Bankruptcy news broke.
 
KAB

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Nearest BB from here put up the "Store Closing" sign today. It's in a very high traffic area to boot.
 

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