April 6, 2011, 12:02 PM

Dish Network is the winning bidder for Blockbuster

The satellite TV company acquires Blockbuster’s assets for $320 million.

Mark Brohan

Research Director

Lead Photo

After two days of back and forth bidding Blockbuster Inc. has a new owner.

The assets of Blockbuster.com, No. 34 in the Internet Retailer Top 500, were acquired Tuesday by satellite television company Dish Network Corp. for $320 million.

Dish, one of several bidders for the assets of Blockbuster, will pay $228 million in cash to acquire the assets and another $92 million for other investor- and creditor-related issues. "With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network," says executive vice president of sales, marketing and programming Tom Cullen.

As part of the winning bid, Dish Network also acquires Blockbuster.com, which generates annual revenue of more than $200 million, and the chain retailer’s emerging digital entertainment and content streaming business. "While Blockbuster's business faces significant challenges, we look forward to working with its employees to re-establish Blockbuster's brand as a leader in video entertainment,” says Cullen.

The sale of Blockbuster’s assets are still subject to approval by the U.S. Bankruptcy Court for the Southern District of New York, but Cullen says Dish Network expects to close the deal by the end of the second quarter.

Many of the details, such as how Dish Network intends to use Blockbuster’s e-commerce operation, have yet to be disclosed. But the acquisition signals that Dish Network, which provides pay TV services via satellite to more than 14.2 million subscribers, sees digital entertainment as a part of its future—and a way to keep pace with increasing e-commerce competition from companies such as Netflix Inc. (No. 14). “The recent growth of video content being delivered via the Internet has made alternatives to traditional pay-TV services available to customers,” Dish says in its latest annual report filed with the U.S. Securities and Exchange Commission. “This increasingly competitive environment may require us to increase subscriber acquisition and retention spending or accept lower subscriber acquisitions and higher subscriber churn.”

Blockbuster has yet to say anything publically about the sale of its assets. The bidding process began In February when Blockbuster accepted a stalking horse bid of $290 million from a consortium of current investors and note holders that includes Cobalt Video Holdco LLC, a limited liability company formed by funds managed by Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Värde Partners Inc.

A stalking horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company that sets the floor for minimum acceptable bids. Blockbuster, which has already closed more than 900 stores in recent years, filed for bankruptcy in September.

Comments | 1 Response

  • I think it’s great that DISH has joined with Blockbuster to give customers more value for their money. I actually work at DISH so I know some of the specifics and I am always recommending that people check it out because it’s worth it. There are over 100,000 titles to choose from and they all include unlimited movies, TV shows and games. There are no late fees or due dates and customers can do five in-store exchanges per month so they won’t have to wait to get their new disc. For the best quality, customers can get blu-ray DVDs at no additional price and when people sign up for DISH Network service, they can try it out free for three months which is longer than Netflix and Redbox. DISH has an exclusive offer that allows customers access to new releases before Netflix and Redbox would have them. DISH also has so many great offers that include the TV Everywhere feature that utilizes Sling Technology so customers can watch live and pre-recorded shows on their mobile devices and they don’t even have to be at home to do so. I know I love the value and I’m always recommending that people check it out here http://goo.gl/wuMrN! *Danielle

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