DALLAS — Dish Network won Blockbuster Inc. in a bankruptcy auction overnight with a $320 million bid, saving the company from liquidation and preserving jobs.
The second-largest U.S. satellite television company indicated Wednesday that it’s interested in Blockbuster’s remaining stores. The Dallas-based
video rental chain entered bankruptcy last September with about 3,200
stores and has closed almost half of those locations.
“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 Dish Network Executive Vice President Tom Cullen.
“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,” Cullen said in a prepared statement.
The transaction still must be approved by the U.S. Bankruptcy Court at a hearing scheduled for Thursday.
Dish led the bidding, which started Tuesday morning.
After South Korea’s SK Telecom dropped out of the auction, the three remaining bidders were Dish, billionaire investor Carl Icahn and a group of Blockbuster’s debtholders.
An expected joint bid by two liquidation firms, Gordon Brothers Group and Hilco Merchant Resources, didn’t materialize.
Blockbuster won’t be Dish Network’s first acquisition this year. In February it agreed to pay more than $1 billion for hybrid-satellite communications company DBSD North America Inc., which was also operating in bankruptcy.
Dish Network’s CEO, Charles Ergen, is also chairman of EchoStar Corp. which acquired broadband satellite service provider Hughes Communications for $1.33 billion in February.
With Dish Network, Blockbuster
still has to prove it’s competitive in a fast-changing home
entertainment business, but at least it’s getting another chance. The
company’s expensive $1 billion in debt is going away, and about 15,000 jobs, down from 20,000, are less in limbo.
Cobalt Video, the group of debtholders led by Monarch Alternative Capital LP, or Icahn were going to sell off the pieces. Icahn loaded up his bidding partners with liquidators. After being involved with Blockbuster since 2004 as a shareholder, board member and then lender, he was only interested in Blockbuster’s digital business, according to people familiar with his plans.
Interestingly, the SK Telecom offer would have been structured more as an investment, similar to the Seven Eleven Japan ownership of Dallas-based 7-Eleven Inc., according to people familiar with the proceedings. Blockbuster CEO Jim Keyes is a former CEO of 7-Eleven. South Korea’s largest telecom company wanted to give more money to the studios and less to the senior secured debtholders. A group of SK Telecom officials were spotted in Blockbuster’s headquarters on Monday.
In the end, Dish’s offer gives more money to the
debtholders and preserves jobs, leases and stores. All stores would
have closed if Icahn or Cobalt had won the bidding, according to people
familiar with the proceedings. It’s likely that Dish will review every
store again and that more stores will close.
Dish gets Blockbuster’s International operations, which weren’t part of the bankruptcy. The studios have a lien on Blockbuster’s operations in Canada, and Dish will have to negotiate that separately.
According to a Blockbuster spokesman, the bidding ended after midnight Wednesday.
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DISH NETWORK AT A GLANCE:
—Headquarters: Englewood, Colo.
—Founded in 1980
—CEO and co-founder: Charles W. Ergen
—Operations: No. 2 U.S. satellite TV provider with 14.2 million customers.
—Stock symbol: DISH
—52-week range: $17.33-$24.76
SOURCE: Dallas Morning News research
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