Blockbuster in Talk to Buy Movielink

Blockbuster Inc. is in advanced talks to buy the movie download service Movielink LLC. According to sources near the situation Blockbuster sees it as a way to speed its entry into the online movie downloading business.

The proposed deal would have the movie rental giant Blockbuster purchasing long term contracts with Hollywood's major studios to supply films and TV show for under $50 million in cash and stock, according to sources on Thursday. The sources are speaking anonymously because the deal has not been finalized.

Blockbuster has declined to comment while Movielink was not immediately available for comment.

Movielink, which is based in Santa Monica, Calif., is owned by a joint venture of Metro-Goldwyin-Meyer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios, and Warner Bros. It currently offers downloads of movies from those studios plus from Walt Disney Pictures, Miramax, and some others. It has offered its movie download service since 2002.

The proposed deal would keep Movielink's technical and management teams intact and they would just move to Blockbuster.

The deal would give Blockbuster a quick way into the online downloading business and bring more marketing muscle to Movielink's efforts to increase their market share now that other big players like Apple's iTunes and Wal-Mart Stores have entered the competition.

A Movielink deal would also raise the competition between Blockbuster and it's chief rival Netflix Inc. Netflix launched it's own 1,000 title streaming video service in January.

Blockbuster and Netflix have been in competition for years for the movie by mail business and both have been looking for new opportunities and technologies to help it's respective cause.

Blockbuster's Chairman and Chief Executive John Antioco said earlier this week that the number one United States movie rental company aimed to offer consumers a "triple play" by providing video rentals not only at stores and by mail, but also as online downloads.

The movie download market is still very new and the technology is far from perfect. Many companies are now scrambling to find ways to quickly move high quality movies over the internet and onto consumer's computers. This is a process that can currently take hours.

Blockbuster's management has been under under intense pressure from its board to quickly turn around the business. Billionaire investor Carl Icahn, a major shareholder who led a successful proxy fight against the board two years ago, now sits on the board with allies who have been pushing for changes.

Blockbuster shares rose 4 cents, to $6.68 in afternoon trading on the New York Stock Exchange. Netflix was up 40 cents, or nearly 2 percent, at $22.92 on Nasdaq.

Sources:
http://www.dallasnews.com/sharedcontent/APStories/stories/D8NJIPL81.html
http://www.reuters.com/article/mergersNews/idUSN0137266720070301
http://news.zdnet.com/2100-9588_22-6163341.html
http://www.marketwatch.com/news/story/blockbuster-talks-acquire-movielink-wsj/story.aspx?guid=%7B704690A5-BE4A-48BE-A427-9737296C1B16%7D