Blockbuster Bankruptcy Well Deserved
The key financial news is that Blockbuster has $975 million in debt and lost $569 million in 2009 after interest payments. During the quarter ended Dec. 31, 2009 Blockbuster's same-store revenue dropped 14.7 percent and it reported a net loss of $434.9 million. This explains why there is considerable talk that it will have to file for Chapter 11 bankruptcy protection. Indeed, shares of Blockbuster Inc. sank 30 percent today (March 17, 2010) after the video rental chain gave public notice that it may have to file for Chapter 11 bankruptcy protection. My amazement is that it plunged only 30 percent because it is probably worthless. The value of all of its stock is now just about $50 million, which is next to nothing these days.
Anyone who enjoys alternatives to Blockbuster knows that this is a company that deserves no sympathy and has no future. What idiot banks and other kinds of companies loaned Blockbuster so much money? The same kinds of financial idiots that destroyed the US economy. The company should not be able to convince creditors to restructure a big chunk of its debt and its business will surely continue to deteriorate.
The company has had to close about 1,300 stores and wants to shut down hundreds more. In 2009 the company shut down 586 stores worldwide, including 353 in the US. It had about 5,200 stores worldwide in January 2010, excluding franchised shops. About 3,500 of those were in the US.
A month ago the company had already filed for bankruptcy in Portugal, showing that it faces stiff competition worldwide.
Blockbuster CEO Jim Keyes who deserves some kind of award for awful management repeatedly downplayed the threat of Netflix and said this in 2008: "I've frankly been confused by this fascination that everybody has with Netflix." What insight! Guess he could not appreciate Red Box either. Indeed, also in 2008, at a time when in-store kiosks with $1 rentals started popping up everywhere, Blockbuster touted its brick-and-mortar business and dismissed the significance of new distribution models.
If major movie studios cut off credit for the DVD renter and retailer, it would likely push the struggling company into bankruptcy sooner rather than later.
I predict that in the relatively near future Blockbuster will go bust, producing more empty stores and even higher unemployment. Many of us will only remember high late fees (recently reinstated), lousy service, too many joyless car rides and too much money spent on terrible movies. Remember Circuit City?
Published by Joel Hirschhorn
Author: Delusional Democracy, Prosperity Without Pollution & Sprawl Kills. Senior official Congressional Office of Technology Assessment & National Governors Assn; full prof Univ. of Wisc. Publishing regul... View profile
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23 Comments
Post a CommentThey were always overpriced and the late fees were a fortune. I say good riddance to a greedy and archaic company that thought of their customers last! These profiteers have to pay the piper now.
What I find most interesting is that Mr. Keyes used to work for 7-Eleven and that those are the very chapters of bankruptcy that Blockbuster ought to be filing.
If you think Blockbuster is still relevant, how about wrapping your mind around this?
Blockbuster employees have access to rentals before customers do and the employees often do not return the items to the store by the time the movie/game is available to the public. This corrodes the availability of rentals and that is how greedy, selfish and careless the employees that work for Blockbuster have become. The employees are clearly not putting you first, so why do the same for them?
Rid yourself of Blockbuster before Blockbuster inevitably rids itself of you.
It really is pathetic that Blockbuster resorts to useless and outdated practices rather than attempt to create something new and interesting. CEO Keyes that Blockbuster has a strong brand and, indeed, that brand is associated with inconvenience (ironically, Mr. Keyes ran 7-Eleven, a CONVENIENCE store chain, at one point), unavailability and rudeness. Blockbuster did not cut anybody a break and now they deserve the same treatment.
Interesting that there are Netflix ads on these web pages but no adds for BB because obviously BB does not have the resources to advertise well; there was a time when I was a member of BB that I would get mailings with free rental coupons, but that stopped. Clearly, there are still consumers choosing BB, but there is absolutely no way that anyone trying to minimize their expenses should choose BB over Red Box or Netflix. I probably have rented well over 100 films from Red Box and never went beyond one night rental; just saw Up In The Air (see my review here at Associated Content)and I really appreciate seeing great films for just $1!!!! Of course, I feel sorry for the workers at BB, as I have for the huge numbers who lost their jobs when their companies folded, but those BB workers surely saw the signs of a losing business and should have looked for other jobs long ago.
LOL, now after they file for bankruptcy,
the CEO will get a 100 mil bonus for destroying another company. Although I really feel bad for the employees, Good riddance. Anytime a major corporation full of greed goes down I rejoice!!!
You wouldn't have 'late fees' if you returned rentals when you promised to return them at check-out.
Video stores don't like to charge late charges, but the movies aren't free to the video stores (or others like RedBox), they have to buy them and turn them many times to pay for them before they can make money to pay their; rent, payroll, and other expenses.
If you don't return it, they can't make money from it and you should pay the extra fee.
RedBox can't offer ideas of a movie to watch like a live person can. I feel sorry for those employees and hope they can find other jobs soon.
To everyone that is saying that netflix and red box has better service, how can you say that there is nobody there. To Joel, you have no sympathy to all of the employees of blockbuster by saying good riddance. I am a manager for blockbuster and thank god that it is a franchised but still don't be a jerk and have some class!!
Hi Joel, your article is extremely convincing with the bright red ad from Netflix pinned next to it. With no job in hand now, I don't subscribe to any of them, but I can't help wondering what if there is a BB ad embedded in your article, what would the content be.
HAHAHAHAHAHHAHAHAHAHAHHA.
yeah, proof that the free market system isnt something to be frowned upon and destroyed. while i sympathize for the blockbuster employees, i do love my redbox. and all those savings.