US NEWS: Blockbuster video chain files for bankruptcy
Updated 24.09.10
As widely predicted, video rental chain Blockbuster has filed for Chapter 11 bankruptcy in the USA. The chain has been struggling to cope with competition from online download/streaming sites.
Despite having $1.46bn of debt, Blockbuster claims it has $102bn in assets and hopes that filing for Chapter 11 protection will enable it to refinance and continue trading as a going concern.
The UK company, which trades separately, should not be affected.
Published 18.03.10
As an increasing number of us download films online or rent them by post, video rental chain Blockbuster has said it may be forced to file for Chapter 11 bankruptcy protection in the US.
The heavily-indebted chain has warned that it's in danger of declaring bankruptcy as it faces a possible credit squeeze by the Hollywood studios and struggles to keep up with movie buffs' changing technological habits.
The Dallas-based company has $975m (£635m) of debt, mainly a result of its spin-off from media conglomerate Viacom six years ago. After large interest repayments, Blockbuster lost $569m in 2009.
Now the chain has revealed to US regulators that it is in negotiations with top Hollywood studios about the financial terms on which they provide DVDs to its stores.
"We are currently experiencing significant liquidity constraints," says Blockbuster. "Should we not be able to generate sufficient cashflow from operations and should the studios tighten or eliminate credit terms, we may determine that it is in the company's best interests to voluntarily seek relief through a pre-packaged, pre-arranged or other type of filing under Chapter 11 of the US bankruptcy code."
The company has found it difficult to keep up with its customers' changing movie-viewing habits. In the US, it has lost customers to the highly popular mail-order DVD service Netflix and $1-a-rental vending machines at supermarkets.
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Comments
This is surely inevitable, why would you go to blockbuster when you can stream it live without moving a muscle. Blockbusters days are numbered in the US and everywhere if you ask me. They should have seen what was coming and opened a decent competitive online rental store. No more getting to the video shop and finding that the movie you want isn't there and no more late fee's for forgetting to take your DVD back.
Well all I can say is that out of all the different DVD hire shops I ever used and that was quite a good number in my area... I'm quite glad something like this has happened if they run their US shops in the same manner as they do over here.... they were/are too expensive and only lately have their prices got anywhere near normal.
It used to cost around �3.50 (sometimes �3.75) or so for a night's hire of one movie ... whilst the other shops would offer any two movies for only �3.00, serves them right. I stopped using them before blu-ray even came out.
great uk service especially if you`re a blu-ray fan