Mom-and-Pops might get to watch Blockbuster close up shop for a change. In a filing with the SEC, the movie rental company acknowledges it may not be able to secure a $250 million loan to continue operations.
Blockbuster, which operates 7,400 stores in 20 countries, had hoped to close next month on financing that would float them until 2010. Because of lender reluctance and the illiquidity facing the larger economy, however, the company may not be able to meet lenders’ terms. From the This news may be surprising for some, especially considering that just a year ago Blockbuster nearly acquired Circuit City, which went under just after Christmas. In the filing, Blockbuster lays the blame on the worldwide economic downturn and the resulting credit crunch, but also briefly mentions the media entertainment industry “channel shift primarily driven by the emergence of new methods of distribution.”
Words Blockbuster doesn’t want to say likely include NetFlix, Amazon, and iTunes, the perfect storm of which forced the Starbucks of video rental to make radical shifts in strategy over the past couple of years. In addition to online offerings similar to (but not as good as) Netflix, the company eliminated in-store late fees, a source of huge revenue for the company over the decades, and heavily marketed that brick-and-mortar advantage.
But all that, in addition to set-top delivery of movie rentals, points out Ars Technica, meant Blockbuster was just Circuit City appears to be planning.
Blockbuster May Have Busted Its Last Block
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