April 06, 2011

Dish Wins Blockbuster in Bid

The once-popular movie rental chain Blockbuster just went bye-bye in an auction and is now in the hands of Dish Network.

After mismanagement, unsuccessfully competing with online movie rental companies like Netflix and eventually filing for bankruptcy, Blockbuster was sold to the satellite TV chain at a price of $320 million.

The Wall Street Journal reported that Dish’s offer exceeded bids from a group led by the New York investor Carl Icahn and from a hedge-fund group led Monarch Alternative Capital of New York.

Dish looks at this as a way to expand by cross-marketing its satellite TV services with Blockbuster’s video offerings.

“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,” said Tom Cullen, head of sales, marketing and programming for Dish.

This deal begs the questions, now that Dish has purchased Blockbuster, does it plan to take on Netflix in an online streaming competition? Is this just one move that has Dish flexing its muscle in the competition’s face?

Dish already has a leg up in TV offerings, as its services are cheaper than major cable players like Comcast and DirecTV (News - Alert). Customers may find that Dish is even more enticing now that it can offer something more than its standard HD and network services.

Netflix has 20 million viewers and their share of digital movie units, either downloaded or streamed, was put at 61 percent between January and February according to NPD. Coming in at number two was Comcast at 8 percent, with a three-way tie for third at 4 percent among DirecTV, Time Warner Cable, and Apple (News - Alert). Those are some pretty hefty numbers to contend with should Dish try to make its foray into the digital streaming video market.

Blockbuster used to dominate the U.S. movie rental business; however it lost significant amounts of money for years as that business declined because customers shifted to Netflix, video on demand and DVD rental kiosks.

Dish hopes to close the deal sometime during the second quarter pending approval of the bankruptcy court.

Michelle Amodio is a TMCnet contributor. She has helped promote companies and groups in all industries, from technology to banking to professional roller derby. She holds a bachelor's degree in Writing from Endicott College and currently works in marketing, journalism, and public relations as a freelancer.

Edited by Janice McDuffee