This week, Blockbuster finally filed for Chapter 11 bankruptcy, asking for protection against its almost $1 billion worth of debt as the video rental company tried to restructure everything. However, the company isn't closing everything down, contrary to probably every store you've seen that has liquidation signs in them. Blockbuster looks to focus on kiosks and online offerings as their main business and wants to keep just a couple of stores open.
Wait, you mean Blockbuster isn't in bankruptcy already? If that's what you, our dear reader, were thinking, then click the break for more!
Yes, Blockbuster has put off the inevitable almost a whole year, while closing almost a thousand stores in the process. That hasn't stopped them from starting a bunch of new distribution deals with movie studios though.
This announcement won't stop them, however. Blockbuster has said in a separate statement that it will still offer newest movie releases to customers 28 days "before our top competitors" and that Blockbuster Express kiosks will still be open for business.
Blockbuster CEO Jim Keyes issued a statement on the matter.
The recapitalized Blockbuster will move forward better able to leverage its strong strategic position, including a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels—stores, kiosks, by-mail and digital. This variety of delivery channels provides unrivaled convenience, service, and value for our customers.
According to the filing, Blockbuster's senior creditors (whom the company owes about $630 million total) will be given equity in the new and improved company, while common and preferred stockholders will be left to fend for themselves.
It's weird that movie studios still think Blockbuster is important, especially because the company owes several studios tens of millions of dollars that won't get paid. Based on the filing, Blockbuster owes 20th Century Fox $21 million, Warner Home Video $19 million, Sony Pictures $13 million, Walt Disney $8.5 million, Universal Studios $8 million, Lions Gate $8 million and that's only the big players!
I guess studios are doing whatever it takes in order beat Netflix, iTunes and Amazon Video on Demand as long as the DVD market lives on.