NEW YORK CITY — Englewood, Colo.-based DISH Network Corp. has been selected as the winning bidder in the bankruptcy court auction of Blockbuster. DISH Network's winning bid was valued at approximately $320 million — $30 million more than the stalking horse bid of $290 million set by a limited liability company formed by a group of Blockbuster's secured noteholders when the auction was approved last month. Reports indicate billionaire Carl Icahn was also one of the bidders in the auction.
“With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for DISH Network,” said Executive Vice President Tom Cullen in a statement. “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.”
Blockbuster's market share had tumbled in recent years in the face of stiff competition from new technologies. Its Total Access service was unable to take market share from Netflix, and lower customer volume has led to half of its retail locations closing in the past year. The company finally filed for Chapter 11 bankruptcy protection last September.
It is unclear how DISH Network plans to deal with Blockbuster's physical presence, since many industry analysts think DISH is more interested in harnessing Blockbuster's online streaming services. Netflix continues to be more popular than ever, and recent news indicates that Google is planning to create original programming for YouTube.
Following court approval, the transaction will close in the second quarter. DISH Network will fund the purchase with $228 million in cash.
— Coleman Wood