Most movie lovers know Blockbuster. BlockBuster Video was a dominating video rental business for well over a decade. The first blockbuster’s Video store opened in Dallas Texas on October 26, 1985.
Blockbuster Inc is reportedly preparing to file bankruptcy about Mid September 2010. A meeting was held with movie studio executives, including 20th Century Fox, Paramount Pictures, Sony Pictures, Universal Pictures, Walt Disney Studios and Warner Bros., to discuss the pre planned bankruptcy. Blockbuster hopes by filing Chapter 11 and using that time to restructure it’s nearly one billion dollar debt load.Blockbuster realizes that the support of Hollywood Film Studio’s is a important factor to keeping new DVD’s on their shelves.
Blockbuster has 3, 425 stores within the U.S.A. of which they hope to let leases on approximately 500 stores close. Blockbuster has not made a decision on which stores will be closing. Blockbuster closed almost 1000 stores in 2009. The people most effected by a store closing are landlords of the rented buildings and Blockbusters junior debt holder (store owners). While BlockBuster will lose revenue from any store closing, others are effected too.
Since January 2008, Blockbuster has lost over $1.1 billion and has interest payments on $920 million of debt. Most of the debt holders have agreed to a forbearance until September 30, 2010 on interest payments, allowing Blockbuster some time.
Blockbuster was delisted from the New York Stock exchange last month and moved to an over the counter market due to it’s repetitive low price. On Thursday, August 26, 2010, BlockBusters stock finished the day at eleven cents. BlockBusters market value is $24 million.
Blockbuster hopes with a successful bankruptcy and restructuring, it can grow through online sales and kiosks with video’s for a dollar a night. This will keep them competitive with Netflix, Redbox and others.
If BlockBuster changed it’s mind or didn’t file bankruptcy, as planned. BlockBuster would need to find new investors and also, convince current debt holders to lower interest payments or extend payments allowing BlockBuster to continue restructuring and making up revenue.