Back on the Netflix/Blockbuster news bandwagon, as if anyone cared.
Blockbuster, the sadly failing movie rental company, might be looking at Chapter 11. From a variety article about Blockbuster's woes
Unlike its largest rivals, Blockbuster is simultaneously investing hundreds of millions of dollars in a new online service to compete with upstart Netflix, and losing hundreds of millions in revenue from a controversial no-late-fee policy launched early this year.
That's created a massive cash crunch and fueled speculation of Chapter 11 -- slicing the stock in half over the past six months alone.
What's truly sad? Blockbuster could have bought Netflix back in the day for next to nothing:
"We had the option to buy Netflix for $50 million and we didn't do it. They were losing money. They came around a few times," [CEO John Antioco] recalls.
Instead, in 2000, Blockbuster inked a 20-year exclusive video-on-demand pact with Enron as the energy conglom launched into telecom. Blockbuster canned the pact after nine months.
Netflix is now worth $1.4 billion. Blockbuster's market cap is about $850 million.
Oops. Another example of the old brick-and-mortar guys not seeing the future for what it's worth, and compensating poorly after the fact.
For now, investors are happy enough to see Blockbuster being able to pay off it's loans. Friday saw a 22% jump in stock as they announced that terms of a loan agreement were made. CEO John Antioco sees "significant growth opportunities" in online services and intends to "aggressively pursue" them, according to this NY Daily News article
Blockbuster, which has been losing money since at least 1997, has about $1.45 billion in debt...
The company said it expects to reach its goal of two million subscribers to its online service sometime next year, later than its original target of 2006's first quarter.
As far as I know, Netflix already has 3.5 million subscribers.
A 22% jump in stock price is nice.. but then again, the price has gone down roughly 80% in the past two years.
Now what was that I was saying about competition helping the consumer?