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DISH Wins Bid for Blockbuster

Discussion in 'More News from Your Google TV News Team' started by Rickaren, Apr 6, 2011.

  1. Rickaren

    Rickaren New Member Staff Member

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    The below article was written before DISH purchased Blockbuster for 320M today. If you read between the lines the plan may include something with Google TV customers they presently have, or will benefit all DISH customers. It will be interesting to see what Dish chairman Charlie Ergen does with this purchase. If you are a DISH customer you should know this guy is a visionary, starting with nothing and now a billionaire. Stay tuned, it should be interesting!!!




    04/05/2011

    NEW YORK — Billionaire investor Carl Icahn, Dish Network and a group of debt holders were the three remaining bidders for movie-rental chain Blockbuster on Tuesday at U.S. Bankruptcy Court in New York.


    The bankruptcy auction will decide the fate of the Dallas movie-rental chain and could decide whether it will survive at all. Bidding was expected to continue well into the evening. It was not clear when it would finish.


    Dish chairman Charlie Ergen, who often plays it close to the vest, hasn't disclosed what he would do with Blockbuster. A spokesman for the Douglas County-based satellite-TV company declined comment Tuesday.


    One analyst has speculated that Ergen may leverage Blockbuster's content licensing agreements to eventually offer an over-the-top-video service similar to Netflix.


    Ergen referenced the service, which delivers movies and TV shows over a broadband connection, as a way to generate more revenue from existing customers during an earnings call with analysts in February.


    "There's certainly over-the-top video, there's certainly broadband, there's certainly other ways to get cash flow out of existing customer relationships you have," Ergen said.


    What's clear is that Ergen believes the pay-TV business model is changing and that maintaining the status quo won't work long term. Dish was the first provider to cut a deal to incorporate Google TV into its service.


    "I probably spent the last three years trying to understand where I think things are going to go, and I feel pretty comfortable now," he said. "I think I know where this thing is going now."


    After several rounds of bidding Tuesday, the last bid by the group of debt holders called Cobalt Video Holdco — $308.1 million — was deemed the best when the courthouse closed for the day. The auction was continuing at law firm Cadwalader Wickersham & Taft, where the proceeding was closed to the public. Another bidder, SK Telecom, dropped out after two rounds of bids.



    The auction is expected to be complete before a sale approval hearing scheduled for Thursday.
     
  2. Rickaren

    Rickaren New Member Staff Member

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    Dish wins Blockbuster auction for $320 million

    [​IMG]
    12:48pm EDT
    By Tom Hals


    WILMINGTON, Delaware (Reuters) - Dish Network Corp won Blockbuster Inc in a bankruptcy auction for about $320 million, boosting the satellite TV provider's online features and marketing reach.


    Dish, the second-largest U.S. satellite TV company after DirecTV, trumped at least three other bidders, including activist investor Carl Icahn, for the one-time leader in video rentals.
    Dish said the deal, which includes more than 1,700 Blockbuster stores, gives it new ways to market its services. The satellite company could use Blockbuster's online business as a base for delivering movies, analysts said.


    The deal marks the second purchase of a bankrupt company by Dish. Last month, Dish got a nod from a bankruptcy court to buy hybrid satellite and land-based communications company DBSD North America for about $1.4 billion.


    Dish chairman Charlie Ergen struck his first deal of the year in February when digital set-top box maker EchoStar Corp, where he is also the chairman, agreed to buy Hughes Communications, one of the world's largest providers of broadband satellite services, for $1.33 billion.


    Dish Network expects to pay about $228 million in cash to acquire Blockbuster. The money will go toward paying off the company's creditors, which include Icahn and other bondholders as well as movie studios, who are owed more than a combined $1 billion.
    David Berliner, a turnaround advisor for BDO Consulting said the deal reminded him of Cablevision's purchase of The Wiz electronics stores as a way to sell it cable TV subscriptions.


    Blockbuster has a similar agreement with Comcast Corp to install kiosks in its stores to sign up customers for the cable company's television service, which competes with Dish.
    Berliner said new management with a background in satellite technology could breath new life into the Blockbuster business.


    "Maybe they can do an even better job with Blockbuster online in terms of deals with steaming video," said Berliner.


    While Dish will likely absorb some initial losses from the stores, Berliner said the deal has upside.


    "They have to continue to move gradually out of bricks and mortar store and get more into online and take advantage of that opportunity," Berliner said.
    Blockbuster had a market cap of more than $5 billion at its peak in 2002, but came under pressure from mail-order and digital competitors such as Netflix Inc.
    Blockbuster filed for bankruptcy in September with a proposal to exit bankruptcy under the control of a group of investors that included Icahn and several hedge funds.
    However, those investors never agreed on a business plan and after poor holiday sales, they withdrew their backing and Blockbuster was put on the auction block.
    Icahn has long been an investor in Blockbuster, and resigned from the board last year. He recently wrote in a letter to the Harvard Business Review that Blockbuster was the "worst investment I ever made."


    The winning bid must be approved at a hearing in federal bankruptcy court on Thursday.
    The case is in re: Blockbuster Inc, U.S. bankruptcy Court, Southern District of New York, No 10-14997.


    SOURCE
     

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