Blockbuster Is Ready to Change

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Blockbuster's (NYSE: BBI) new CEO, Jim Keyes, isn't mincing words. This morning's earnings report was about as miserable as Wall Street had expected, as the subscriber-count tug-of-war with Netflix (Nasdaq: NFLX) is taking its toll.

Keyes had a refreshingly open attitude about the profitability issue, though. The former 7-11 CEO allowed that the current wholesale commitment to Total Access growth is hurting profits and said that Blockbuster is "undergoing a comprehensive review of its business aimed at identifying and implementing initiatives designed to revitalize the Company, enhance the organizational structure and improve profitability."

It's all about responding to the ever-changing needs of the fickle consumer on a timely basis, and he'll tell us exactly how the company plans to go about it "later in the year."

It's interesting to note that amid all the cost savings, job cuts, and store closings, Blockbuster isn't only staying committed to Total Access in its current, consumer-friendly but company-maiming form, but also supports it with a massive and expensive marketing effort.

Sure, the online rental subscriber base grew 157% year over year, but I'll bet it was expensive. The company still won't break out subscription-related metrics like customer-acquisition costs. I'd love to see operating margins by segment, online and offline, but all we get broken out are sales and comps. It can't be terribly difficult to come up with the numbers, so I'm wondering whether it's just a matter of reporting tradition, or that management just can't handle telling the truth.

Either way, with fresh blood at the top, perhaps we can get some new insights in the next few quarters. For those of us who care about the battle for online domination, those figures would be helpful. Today, all we can do is make some assumptions and a few wild guesses based on incomplete data. And if I feel mistreated here, being a Netflix owner, imagine how Blockbuster shareholders might see the issue.

Further Foolishness:

• Foolish Forecast: Blockbuster's Last Stand
• 5 "Keyes" to Saving Blockbuster
• Blockbuster: Hooray for Blu-ray

Fool contributor Anders Bylund holds no position in any of the companies discussed here, apart from his Netflix shares. You can check out Anders' holdings if you like. Lines for our Foolish disclosure blockbuster are stretching out for miles, block by block.