Blockbuster May File for Bankruptcy Protection
After Hollywood Video owners Movie Gallery filed for bankruptcy protection, Blockbuster may be going down the same path as its competitor. The company's annual report mentions the possibility of filing bankruptcy protection several times.
The company's stock took a 29% dive this past Wednesday. Rumors of the company's filing for bankruptcy caused the company's stock to dive 77% just one year ago when similar rumors spread, but the company held firm that it would not be doing any such thing.
Blockbuster shuttered 430 company-owned stores last year, and is expected to shutter an additional 545 more this year. The company lost $435 million in its fourth quarter and is $964 million in debt, with $112.5 million in principle due this year.
Redbox and Netflix have been taking away the rental chain's thunder for a while now, and its annual report also cites TiVo as being a threat to them, despite their being in alliance with Blockbuster in their On-Demand service, too.
The company says that it will need to restructure its relationship with movie studios in order to pull through. It is also introducing video games to its by-mail movie delivery service to compete with Netflix, and it is planning on deploying 10,000 rental kiosks by the end of 2010 to compete with Redbox - which would likely have to include the same $1-a-night prices that Redbox offers to compete.
