Blockbuster UK‘s administrators, Moorfields Corporate Recovery, last month said they were focusing on securing a future for as much of the business as possible, and trying to save jobs before Christmas. Sadly, the holiday will not be a festive one for the ailing video rental chain’s final 808 store employees. Moorfields today said the remainder of the shops will cease operations in Britain by December 16th. The closure of those 91 outlets comes after last week’s announcement that 62 stores were shuttering with a loss of 427 jobs. The full shut down of Blockbuster UK outlets follows one month on from Dish Network’s announcement that it would close Blockbuster’s 300 remaining U.S. retail stores and distribution centers. In January, Blockbuster UK sought bankruptcy protection with Deloitte acting as administrators. Then in March, the chain looked like it might get a reprieve as private equity firm Gordon Brothers Europe acquired the company’s business and assets. But Gordon Brothers was unable to orchestrate a turnaround and last month, Moorfields was appointed administrator. Moorfields said last week that the last 91 stores risked closure. All remaining stock will be sold by December 15th at up to 90% discounts. Moorefields’ Simon Thomas and Nick O’Reilly said, “It is with regret that we have to make today’s announcement, we appreciate this is a difficult time for all concerned and would like to thank staff for their professionalism and support over …
This morning, Britain’s Chancellor of the Exchequer touted the UK’s falling unemployment rate as he delivered the Autumn Statement to Parliament. Unfortunately, he may have to recalculate his figures. A month after Dish Network said it would close Blockbuster‘s 300 remaining U.S. retail stores and distribution centers, Blockbuster in the UK is facing a similar fate. Moorfields Corporate Recovery, which was appointed administrator of the ailing video rental chain in November, said today that no acceptable offers have been received which means further closures ahead. Last month, Moorfields had already announced that 30 stores employing 182 people would close. Now, 62 more stores will shutter, eliminating 427 jobs. Moorfields added that it may be forced to close the remaining 91 stores, which would affect 808 employees. In January, Blockbuster UK sought bankruptcy protection with Deloitte acting as administrators. Then in March, the chain looked like it might get a reprieve as private equity firm Gordon Brothers Europe acquired the company’s business and assets. But Gordon Brothers was unable to orchestrate a turnaround and last month, Moorfields was appointed administrator. At the time, Moorfields said there were “parties who are interested in parts of the business. Our focus will be to secure a future for as much of the business as possible as well as trying to save jobs before Christmas.”
Listen to (and share) episode 58 of our audio podcast Deadline Big Media With David Lieberman. Deadline’s executive business editor and host David Bloom recap another intense week of quarterly earnings announcements, led by Disney’s Marvel-ous deal with Netflix; CBS’ blithe handling of the Time-Warner Cable fight; Time-Warner’s cord-cut HBO offer; and DirecTV’s flirtation with an Aereo-like option to reduce fast-growing retransmission fees. This week also saw Twitter notch a massive IPO whose rocket-ship outcome left many analysts scratching their heads, and a moment of silence for the death of former entertainment-industry brute Blockbuster, a one-time Colossus that now is a historical footnote.
Say good night to the Blockbuster night. The video chain that a decade ago made moguls tremble with its stranglehold on video rentals will be gone in January: Dish Network, which paid $234M to take Blockbuster out of bankruptcy in early 2011, said today that it will close the 300 remaining U.S. retail stores as well as its distribution centers. Blockbuster’s DVD-by-mail service also will end, though franchisees and licensed Blockbusters stateside and overseas will be unaffected. “This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish CEO Joseph Clayton says. Dish will keep the Blockbuster brand and video library. It also will continue the Blockbuster @Home service it offers to Dish customers, as well as the Blockbuster On Demand transactional streaming service.
The satellite company says that it was hit by several factors including the effects of a price increase, rising programming costs, and the continued downturn at Blockbuster. Dish ended up with Q1 net income of $210.7M, -41.5% vs the period last year, on revenues of $3.56B, -7.4%. Analysts thought revenues would come closer to $3.61B. And earnings at 47 cents a share were 6 cents short of the consensus forecast. The company ended the quarter with 14.1M subscribers, +36,000 vs an increase in last year’s Q1 of 104,000. Dish says it was hurt by a rate hike which it did not have last year. The deconsolidation of Blockbuster UK and closing of U.S. storefronts resulted in a 46% drop in the operation’s revenues to $180M, while operating income fell to $1M from $14M. It had about 650 domestic stores at the end of March, down 150 in the quarter, and says it will close another 150 this quarter. In the satellite business, the February price increase contributed to a 3% rise in the average revenue per subscriber to $78.54 a month.
The UK’s home entertainment sector took a big blow in January when retail giants HMV and Blockbuster filed for bankrupty protection within days of one another. Private equity firm Gordon Brothers Europe rode to the rescue of Blockbuster last month, and today, restructuring firm Hilco says it’s completed an acquisition of HMV’s business and certain assets. Those include 141 stores – 25 of which had been slated for closure – and about 2,500 employees. Hilco CEO Paul McGowan said, “We have spent a number of weeks negotiating revised terms with landlords and the key suppliers to the business, all of whom have been supportive of our plans to maintain an entertainment retailer on the High Street.” Hilco is seeking to re-establish HMV in Ireland after receivers there shuttered the business. The company also owns HMV Canada and hopes to replicate some of the success it’s had in that market. Exec Ian Topping said the Hilco team would “use some of the developments already progressed in Canada to restore HMV to health. We intend to reverse the earlier decisions to sell tablets and other devices in the stores and to reclaim the space for an enhanced music and visual range.”
Blockbuster UK has been pulled back from the brink of bankruptcy with private equity firm Gordon Brothers Europe riding to the rescue and acquiring the company’s business and assets. Blockbuster sought bankruptcy protection in January with Deloitte taking over the day-to-day operations and looking for a buyer. Financials were not disclosed, but Gordon Brothers said the 264 stores across the UK and Channel Islands will continue to operate on a business-as-usual basis, saving over 2,000 jobs. When Blockbuster first went into administration in January, it had 528 stores. Supermarket chain Morrisons bought 49 of them and about 200 were closed, BBC News notes. As with UK retail giant HMV, which has also sought bankruptcy protection, Blockbuster has faced stiff competition from online streaming services, which in the UK include Lovefilm and Netflix. Gordon Brothers said it will make “substantial investment” and fully utilize Blockbuster’s “existing trading platform, powerhouse brand and extensive customer database.” It intends to enhance “the customer experience through the use of new product offerings, new technologies and better basic retailing.” Gordon Brothers CEO Frank Morton said, “We acknowledge the industry is in transition;
The Dish Network chairman says he missed the boat with his strategy for Blockbuster: He told AllThingsD’s “D: Dive Into Media” conference today that he bought the video chain out of bankruptcy because he wanted to use the stores to sell a new wireless broadband service he’s developing. But that became moot when his effort took longer than he envisioned. Meanwhile, “we were too late” to the streaming business. “Under the radar [Netflix] got critical mass and [now] can buy any program that they want to,” Ergen says. “We didn’t have the guts to buy the content and start from scratch.” That doesn’t mean Amazon’s streaming service is doomed. “They both can be successful….Amazon can subsidize it.” But Ergen says he’s a “fan” of Netflix and its business model. The financing of the original series House Of Cards was “brilliant…I feel stupid that we didn’t think of it first.” The man behind the Hopper ad-skipping DVR — being challenged in court by broadcasters who say it violates their copyrights — also got some laughs by noting that Netflix has no commercials. “They’re not getting sued. You can watch 60 Minutes in 40 minutes.”
EXCLUSIVE: Several sources tell Deadline that UK distributor Revolver Entertainment is on the verge of going out of business with the fate of films on its release slate uncertain at the moment. Word making the rounds in Berlin and London is that the company may not exist in as little as two weeks, and chances of a turnaround are slim. Revolver has shed staff in recent months and key execs Nick Taussig and Paul Van Carter left to form their own outfit, Salon, last week. Calls to the company’s CEO were not immediately returned.
A shuttering of Revolver, which has had big success with cult hits like Shank and Anuvahood as well as recent documentary The Imposter, would put further strain on an already bleak picture for low-budget independent distribution in the UK. It would also create a hole in its specialized area — British fare with urban appeal — which is poorly represented in the local market. The collapse of retail giants HMV and Blockbuster is thought to have caused leaks in Revolver’s hull. An overrun of stock meant for the shelves of those stores, and matching promotional spends, created overhead challenges, one source said. Another source stressed that Revolver’s combination of talent and film selection is not at fault. They have been “hit by a series of unfortunate events.”
UK distribution is already experiencing shifts. The eOne takeover of Alliance resulted in key execs exiting and the absorption of distributor Momentum Films. (Contraction is not limited to the UK: French indie powerhouse MK2 just recently said it would stop distributing films.) We’re hearing, however, that a new UK distributor could emerge by Cannes. “I think people are falling into place,” one exec recently opined. Another tells us, “Adversity makes opportunity. Somebody smart will come in and take that space.”
That represents 35% of the 850 domestic Blockbuster stores that Dish Network reported it still had at the end of September. “Some of the approximately 300 stores are reaching the end of their lease and others are closing based on overall performance,” company spokesman John Hall says. He adds that Dish still sees “value in the Blockbuster brand” but that Dish “will continue to analyze store level profitability and – as we have in the past – close unprofitable stores.” The decision follows last week’s announcement that Dish put Blockbuster UK into administration — the equivalent of bankruptcy. Dish has been struggling with the video retail chain since April 2011 when it paid $238M to take it out of bankruptcy. In Q3 — the first quarter that offered a clean comparison with the previous year — Blockbuster generated an $11.9M operating loss, down from a $3.6M profit in 2011, on revenues of $230.9M, -33.5%. Dish CEO Joe Clayton told analysts in November that he was hopeful new marketing strategies and improved in-store displays would boost Blockbuster rentals in Q4, “which is traditionally the highest performing quarter for all retailers.” He added that he planned to “focus on individual store profitability and the execution of our long-term strategy.”
Blockbuster now becomes the second UK retailer this week to go into administration, the British equivalent of bankruptcy protection, after music and DVD chain HMV did the same on Tuesday. As it has in the U.S., the movie and video game rental giant has faced increasing competition from online streaming services, which in the UK include Lovefilm and Netflix. Deloitte, which was also hired by HMV, will take over the day-to-day operations at Blockbuster UK which has 528 stores and employs 4,190 staff. Stores will continue to do business while the firm seeks a buyer. In a statement, Deloitte’s Lee Manning said, “We are working closely with suppliers and employees to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors.” The first Blockbuster UK store opened in 1989. In April 2011, Dish Network acquired Blockbuster Inc. in a bankruptcy auction for $320M. Blockbuster UK is owned by Dish, but operates separately from its U.S. parent.
Chairman Charlie Ergen is probably glad to put the quarter that ended in September behind him. His $700M settlement with AMC Networks and Cablevision in the breach of contract trial over the VOOM HD channels, and marketing costs for his controversial Hopper DVR, put a big dent into earnings. Dish reported a net loss of $163.3M, down from a net profit of $319.0M in the period last year, on revenues of $3.52B, -2.2%. The revenue figure was short of the $3.65B that analysts expected. And the 35 cent net loss per share contrasts with the consensus forecast for a 55 cent profit. The biggest hit for Dish was its $730.5M hit for litigation expenses, including $676M for the VOOM case. The company also recorded a $54M programming expense tied to its agreement, as part of the court settlement, to resume carrying AMC Networks’ channels including AMC, IFC, We, and Sundance Channel. The decision in June to dump the channels “contributed, in part, to our higher subscriber churn rate” in the quarter, Dish says. The company ended the quarter with 14.04M subscribers, down 19,000. That’s less of a loss than the company recorded in the quarter last year, and pretty much what analysts expected considering the company’s increased advertising around the Hopper.
The No. 2 satellite company added 104,000 subscribers, bringing its total to 14.1M. Analysts only expected to see a pick up of about 88,000. The company attributes its strong performance to a decline in its churn rate — helped by the fact that it didn’t increase its subscription prices the way it did last year. The financials are a little more complicated: Dish generated $360.3M in net income, down 34.5% vs the same period last year, on revenues of $3.6B, up 11.1%. The decrease in profit is partly due to the fact that last year’s results had a $341M boost from a reversal of litigation expenses following the settlement of the patent infringement lawsuit with TiVo. The revenue figure was in line with analyst forecasts. And earnings, at 80 cents a share, beat projections of 70 cents. About $334M of the company’s revenues, and $14M in operating income, came from Blockbuster, acquired in April 2011. Dish says it benefited from the sale of the rental chain’s inventory: It closed about 500 domestic stores in Q1, bringing the total down to about 1,000. Dish says it plans to close another 100 domestic Blockbuster stores in the current quarter and warns that its evaluation of the chain’s performance “could lead us to close additional Blockbuster retail stores.” CEO Joseph Clayton says he’s “encouraged by two quarters of net additions, as well as a reduction in churn.” Although the company provided no details about …
The year-end report from market research firm The NPD Group provides yet more evidence that the disc-rental business is in trouble. That shouldn’t bother Redbox yet: The firm’s kiosks accounted for 37% of all movie DVD and Blu-ray rentals, up from 25% in 2010. Netflix remained flat for the year at 30% — although its self-inflicted wounds (remember Qwikster?) were apparent in Q4 when it had just 25% of the disc rentals, a two-year low. The big loser was Blockbuster, which shuttered hundreds of stores as it retrenched from bankruptcy. Bricks-and-mortar stores, the field Blockbuster dominates, accounted for 17% of rentals, down from 23% in 2010. The silver lining is that many consumers now are paying to rent movies from VOD services: They accounted for 31% of all paid movie rentals last year. Netflix is the leader here but can take small comfort from the NPD tally: Its VOD market share dropped from 59% in Q2 and Q3 to 55% in Q4. “The movie-rental market is clearly undergoing a sea change, as consumers become better equipped to access on-demand and streamed movies and are more comfortable with available delivery options,” says Russ Crupnick, SVP for Industry Analysis. “Even so renting physical discs from now-ubiquitous kiosks in grocery stores and other venues has taken the lead as the most popular movie-rental method in the U.S.”
The big question following this expected announcement is whether Redbox and Blockbuster will tell Warner Bros to take a hike and buy the studio’s new discs from retailers. That’s one reason why other studios have been reluctant to push for the longer window. But Warner Bros made the announcement at the 2012 International CES because it’s eager to push low-cost rental services aside in the hope that the entertainment industry’s new UltraViolet initiative will boost sales of DVDs and Blu-ray discs. UltraViolet enables buyers of some discs to stream the movies from remote servers to digital devices including smartphones and tablets. “Since we implemented a 28-day window for subscription and kiosk, we have seen very positive results with regard to our sell-through business,” Warner Home Video North America president Mark Horak says. “One of the key initiatives for Warner Bros is to improve the value of ownership for the consumer and the extension of the rental window — along with our support of UltraViolet — is an important piece of that strategy.” Netflix VP Content Anna Lee says that it is going along with the longer delay “to ensure members have continued secure access to Warner Bros DVDs and Blu-ray discs.”
Dish Network is looking to make a splash at this week’s 2012 International Consumer Electronics Show in Las Vegas — but one announcement, which leaked out prematurely, could raise the ire of ABC, CBS, Fox, and NBC. Tech trade publications Dealerscope and TWICE broke news embargos tied to Dish’s press conference later today regarding a multi-room DVR called Hopper: It will have three tuners and a huge storage capacity of 2 terabytes. Hopper will make it possible for users to stop watching a recoded show in one room and resume where they left off in another, reports blogger Dave Zatz, who saw a posting of the TWICE article before it was taken down, and Multichannel News, which caught the one yanked from Dealerscope. But it also includes a feature called Primetime Anytime that will automatically record primetime broadcasts from local stations for ABC, CBS, Fox, and NBC and retain those shows for a week — in effect turning Hopper into into a catch-up VOD service. Broadcasters have been licensing catch-up rights to Hulu and cable VOD. The TWICE article also notes that Dish is dropping the word “Network” from its name as it focuses more on technology.
UPDATE, 1:45 PM: Redbox just issued this statement about the alleged deal. “The current agreement Coinstar has with Warner Bros. is to receive movie titles 28-days after their release. No revised agreements are in place.”
PREVIOUS, 12:03 PM: Warner Bros has sealed a deal with Netflix, Redbox and Blockbuster that will expand the studio’s release window for new DVDs to 56 days, the tech blog AllThingsD is reporting. The current window is 28 days between when the discs first go on sale and when customers can rent from the retailers. Warner Bros is saying it isn’t going to comment on speculation, but it has been exploring seeking wider window in an effort to offset declining DVD sales, and it is pushing the nascent UltraViolet format that allows users to rent or buy movies that can be viewed on multiple platforms. (The company said during the Citibank conference yesterday that UltraViolet, which is available via the company’s recently acquired Flixster site, is still in the growing stages. “The product is not where we want it to be, but someone has to take a leadership position,” CFO John Martin says.) The latest report says the deal for the new window is expected to be unveiled during the Consumer Electronics Show, which begins Monday in Las Vegas. The question that remains, though, is what’s stopping retailers from buying discs on the open market and making them available day-and-date, …
For the last week or so we’ve been fascinated by the possibility that Verizon will create a streaming video business. But don’t forget Dish Network, which also owns Blockbuster video. “If Verizon can do it, why can’t we?” Dish Network CEO Joseph Clayton asks Bloomberg. He added that “there’s not a lot of infrastructure you have to put in place for this. The expense is the programming.” Dish is already talking to TV networks about potential licensing deals. Dish also wants to amass wireless spectrum so it can do an end-run around cable and phone company broadband services. Clayton notes that Dish has more opportunities now than it did just a few weeks ago to forge partnerships that might give it better access to the airwaves — and offer a full range of video, voice, and data services.
T-Mobile is a potential ally if its merger with AT&T collapses following Justice Department and FCC attacks on the $39B deal. That appears more likely today: Justice put its antitrust case against the companies
NCR wants to sell the Blockbuster Express DVD kiosk business, but it may have to deal with some angry customers on Tuesday when it implements its 3-2-1 pricing plan. The company will continue to charge $3 for the first night to rent a DVD that’s been out 28 days or less. (Actually new movies will cost a penny more; they’re now $2.99.) The big change involves DVDs from the 29th to the 90th day after they’ve been released: NCR is raising the first night price to $2 from $1. After 90 days the price drops to $1. In each case it costs an extra buck for each additional night. (Blu-ray discs cost $1 more than DVDs in each window.) Why is NCR making the change? It has some PR cover; Redbox just increased its price to $1.20 from $1. And last week NCR’s John Bruno told analysts that the company is exploring “profit-enhancing initiatives including premium pricing for the new releases.” NCR also wants to keep studios happy: With its higher price, Blockbuster Express isn’t subject to the 28-day delay on new releases that