Dish Network looks to be getting into the video rental game with its just announced purchase of the failing Blockbuster for some US$320 million. Ultimately, Dish expects it will spend about $228 million in cash after “certain adjustments are made at closing of the transaction.”
Blockbuster had been on the prowl for a buyer ever since it filed for Chapter 11 bankruptcy protection last year.
Dish is snatching up Blockbuster
Once the reigning king in the video rental industry, Blockbuster began its downward spiral when Netflix came on the scene with its rental through the mail service that didn’t require customers to visit a physical store, and removed time limits that otherwise would stick users with late fees.
Blockbuster ran into even more trouble when potential customers started using the Netflix streaming service along with Apple’s iTunes Store to view movies and TV shows. With online streaming and rental services available, customers didn’t even need to leave the couch to browse, select and watch movies.
Dish Network executive vice president of Sales, Marketing and Programming, Tom Cullen, didn’t say exactly what the satellite TV provider intends to do with Blockbuster, but he did hint that at least the company name wouldn’t be going away. “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,” he said.
The deal is expected to close some time in the second quarter of 2011.