Blockbuster may go bankrupt

[Bronx]

http://www.suntimes.com/output/business/cst-fin-profits09.html

Blockbuster, the nation's biggest video-rental chain, reported a smaller third-quarter loss because of reduced costs and may file for bankruptcy protection after losing customers to Netflix and Wal-Mart.

The loss shrank to $491.4 million, or $2.67 a share, compared with $1.41 billion, or $7.81, a year earlier, Dallas-based Blockbuster said.

Sales fell 2 percent to $1.39 billion, the second consecutive quarterly decline after the company abolished late fees.

Blockbuster, saddled with $1.27 billion in debt, said lenders and customers have restricted the company's credit and could push it into bankruptcy. The company said it will sell assets, cut $150 million in spending, and close stores as it struggles against Netflix and retailers selling videos at a discount.

''The industry is in a tough spot, and they're doing everything they can to offset that,'' said Southwest Securities Inc. analyst Arvind Bhatia. ''There are too many stores.''

Shares of Blockbuster fell 20 cents to close Tuesday at $4.07, adding to the 55 percent slump so far this year. Netflix' stock has more than doubled.

[thecoalman]

Good, I used to be able to go down the street to rent a movie, Blockbuster hit the market and I had to travel 20 minutes. Looks like everthing has come full circle because now I only have to go to my mailbox.

[lordsmurf]

"There are too many stores" is true here. There are 4-5 locations within 10-15 miles of where I am. Their pricing is also not very good, $7 per game, $5 per movie. For those prices, may as well just buy them or do an online plan with somebody else. Some of the practices, like tossing out DVD cases and using their own, is pretty wasteful. What's wrong with a big sticker on the case it came in? Surely all those cases add up in $$$$$$.

[Cornucopia]

These days, I'm using the library. Nearly as good selection, better terms (usually free), and if I do happen to be late, the fees go to a local enterprise and a good cause.

Scott

[rijir2001]

If all you have for rental is new releases you don't deserve to last.

[Bronx]

I can't even remember the last time I used Blockbuster.

I use Netflix and am happy with the pricing. The switch from BB to Net'x has made a difference in my wallet.

[TBoneit]

"There are too many stores" is true here. There are 4-5 locations within 10-15 miles of where I am. Their pricing is also not very good, $7 per game, $5 per movie. For those prices, may as well just buy them or do an online plan with somebody else. Some of the practices, like tossing out DVD cases and using their own, is pretty wasteful. What's wrong with a big sticker on the case it came in? Surely all those cases add up in $$$$$$.

Re the cases: I believ they use their cases for security. I haven't been to blockbuster in years but if they're like the Hollywood video near me the cases on the shelf have a special gizmo that they have to remove at the register before you can open the case. This saves them from having to do like some stores have done in the past where you bring the empty case to them and they pull you DVD from a drawer. Plus I'll bet the security strip is built into the case or at least on the inside so you can't just hide the DVD and split without setting off the detector.

OTOH I could be wrong it could just be stupidity.

Myself once in a blue moon Hollywood Video, but mostly Netflix & Nicheflix US Mail rentals.

Cheers

[Faustus]

Re the cases: I believ they use their cases for security.

Funny thing is there was a chain of stores around here called Moving Trading Company.

They had decent priced rentals, would rent out boxsets, would take the rental price off the USED price of a movie and decided you wanted it, and everything came in its own original case with a few exceptions. Did I mention that if they had a new copy and the others were rented they would open the new copy and rent it? After a few rentals in their system it would be marked used and marked down for sell.

It worked great, they had several stores.

Alot of poeple don't know this but they were bought by BlockBuster, yet still operate under the MTC name and still have the movies in their cases. Same company different policies.

Sadly their prices on box set rentals went up quite a bit, sometimes they would even refuse to rent some box sets so we got pissed and stopped going there. So blockbuster did ruin them somewhat.

Anyway thought I'd toss that in.

[ROF]

My local Blockbuster uses the original cases with an RFID type security tagged inside those cases. They used to use their own cases but they advertised the switch to using the cases with the movies label as a benefit to the consumer.

Bankruptcy in the modern sense is used for restructuring purposes not a going out of business process.

[GullyFoyle]

I stopped renting movies years ago. I do pay for cable with all the bells and whistles. Which makes it kind of pointless to rent a film that will be on tv in a couple of months.
I do buy some dvd's worth keeping.
But honestly most american film is so crappy these days I can't see why anyone would rent. Three or four films a year worth watching with whats left as junk.
But I'm sure someone somewhere is crying that the bad old p2p filesharing pirates did it.
Argh matey!

[GullyFoyle]

My local Blockbuster uses the original cases with an RFID type security tagged inside those cases. They used to use their own cases but they advertised the switch to using the cases with the movies label as a benefit to the consumer.

Bankruptcy in the modern sense is used for restructuring purposes not a going out of business process.

How does this whole bankruptcy thing work with the new anti-bankruptcy bill?
Is there a loophole for corporations that is closed for the masses?

[ROF]

I dunno about the new bankruptcy laws, but I'm quite sure that bankruptcy is still used as a restructuring of debt tool used by individuals and corporations and not solely for the purpose of killing your business ventures.

[thecoalman]

How does this whole bankruptcy thing work with the new anti-bankruptcy bill?

I believe that is only for personal bankruptcy, business bankruptcy is not affected by it. Too many individuals were running up massive amounts of credit card debt then just declaring bankruptcy but instead of having to pay their debt they were getting off with paying nothing....

[ROF]

Business do the same thing to alleviate debt. Alot of the debt is written off while other debts are restructured to allow the company time to pay without further degrading their status or something like that.

[ricky d]

If all you have for rental is new releases you don't deserve to last.

Totally - Seems to be that all of the blockbusters stores have shrunk over the years, or just the inventory seems to be decreasing in size.. All they have now is the "classics" of the last 20 years (that everyone has scene) and the new releases - which recently / mostly amounts to recycled drivvle.

The net is were it at, don't even have to go to the mailbox! However, I feel better off going to a localy owned and operated video store that actually has a "deep" inventory (if you need the quality) - supporting small business...

[ROF]

Again, my local blockbuster regularly switches out or gets in older movies, especially those older movies that are just now being released on the DVD format. I must have an exceptional Blockbuster because this isn't the first place I've heard bad in store blockbuster issues. Our Blockbuster also puts the new releases on the shelf between 9-10PM the day before the release date. They close at midnight which gives me a few hours to make sure I can get the release before it disappears the next day. Our Blockbuster only charges .25 cents more than the other video stores which when you compare the selection, Blockbuster destroys this local competition.

[handyguy]

BB has been through this before & they came out alright.

My store turned off the alarms, I noticed that when I tested them.

[SCDVD]

There are many opinions about whether Blockbuster "deserves" to fail or not. There are some good points to back that up. But there is a broader issue as well. If Blockbuster does ultimately go out of business, a significant competitive force will be gone. You know the story - less competition then higher prices and reduced service from the survivor(s). Be careful what you wish for; you might get it.

[GullyFoyle]

How does this whole bankruptcy thing work with the new anti-bankruptcy bill?

I believe that is only for personal bankruptcy, business bankruptcy is not affected by it. Too many individuals were running up massive amounts of credit card debt then just declaring bankruptcy but instead of having to pay their debt they were getting off with paying nothing....

Wow just so simple.
http://www.moranlaw.net/legislation-kiosk.htm

Bankruptcy bill back

The so called bankruptcy "reform" bill passed the Congress April 14, 2005. It will impact only cases filed on or after October 17, 2005.

The bill is founded on the belief that a substantial number of those filing bankrutpcy could, if they wanted to, repay their debts. Studies generally show that only about 3% of bankruptcy filers could repay as much as a third of their debt.

Just the week before, Harvard Medical School and Law School released the results of a study showing that about half of the bankruptcies in 2001, involving 2 million individual debtors and their children, were caused by medical expenses. More details from the study.

The American Bar Association issued a warning to Congress that provisions of the bill would seriously hamper consumers seeking a fresh start in bankruptcy and interfer with the debtor's right to legal representation.

http://www.talkingpointsmemo.com/bankruptcy/archives/2005/03/index.php#005023

(March 06, 2005 -- 11:10 PM EDT // link // print)

I’ve been doing research on families in financial trouble for more than twenty years to learn how many people were abusing the bankruptcy system. My colleagues and I did a really extensive analysis and learned that families turn to bankruptcy not because they want to find a way not to pay, but because they are desperate. More disturbing, we released a study earlier this year that revealed that over half of bankruptcies are in the aftermath of medical emergencies.

I never wanted to get involved in politics, but the bankruptcy bill now moving on a fast-track through Congress isn’t fair. It beats up the average family already staggering under the weight of bad luck and huge debts, while it lets real abusers go free. That appears to have been the idea from the start.

In 1997, financial services lobbyists wrote the bankruptcy bill and shopped it to “friendly” Congressmen. Since then, the bill has been introduced and re-introduced. Despite the very public bankruptcies of Enron, Worldcom, Adelphia, Polaroid, United Airlines, US Airways and TWA, there are no new provisions to rein in corporations that are paying millions to insiders while they cancel employee health benefits and wipe out retirement plans. Instead, this bill focuses on families, clamping down on people who have been driven to bankruptcy by job losses, by medical problems and by family break ups.

Why?

Because those are the people who owe credit card bills, and the credit card companies are the driving force behind this legislation. Some in the Senate recognize this.

The bill is more than 500 pages long, all in highly technical language. But the overall thrust is pretty clear:

• Make debtors pay more to creditors, both in bankruptcy and after bankruptcy, so that a bankruptcy filing will leave a family with more credit card debt, higher car loans, more owed to their banks and to payday lenders.

• Make it more expensive to file for bankruptcy by driving up lawyers’ fees with new paperwork, new affidavits, and new liability for lawyers, so that the people in the most trouble can’t afford to file.

• Make more hurdles and traps, with deadlines that a judge cannot waive even if someone has a heart attack or an ex-husband who won’t give up a copy of the tax returns, so that more people will get pushed out of bankruptcy with no discharge.

• Make it harder to repay debts in Chapter 13 by increasing the payments necessary to confirm in a repayment plan, so that more people will be pushed out of bankruptcy without ever getting a discharge of debt.

There are people who abuse the system, but this bill lets them off. Millionaires will still be welcome to use the unlimited homestead exemption. And if they don’t want to buy a home there, they can just tuck their millions of dollars into a trust, a “millionaire’s loophole” that lets them keep everything—if they can afford a smart, high-priced lawyer.

I don’t get paid by anybody on any side of this fight. I just think it isn’t fair.


-- Elizabeth Warren

Interesting how the common man always get caught without a Golden parachute like bankrupt CEO's have.
So much for simplicity.

[Scarpad]

Business do the same thing to alleviate debt. Alot of the debt is written off while other debts are restructured to allow the company time to pay without further degrading their status or something like that.

Well that happens but the majority of debt comes usually after some disabilitating injury where one long Hospital stay wipes out your personal finances. Buisnesses are protected, individuals can go to hell, typical.

[jmikeh]

These days, I'm using the library. Nearly as good selection, better terms (usually free), and if I do happen to be late, the fees go to a local enterprise and a good cause.

Great post. I have been using my local library for a few years now as well. The price is hard to beat...