Here's a recipe that's more likely to tickle your funny bone than your taste buds: Take one part fledgling satellite television provider, one part fading retailer, and mix them up in a leveraged bowl.

I would call this a recipe for disaster, but some financial culinary types feel that DISH Network's (Nasdaq: DISH) winning bid for Blockbuster can be Netflix's (Nasdaq: NFLX) last supper.

I get why shares of Netflix took a hit yesterday after hitting an all-time high earlier in the day. Blockbuster is the only company with the infrastructure in place to match Netflix in digital delivery and home-delivered disc rentals. Among the eclectic ranks of Blockbuster bidders, DISH is the most likely to keep Blockbuster going -- for now.

Netflix, Redbox, and pay-per-view providers would have been better off had liquidators emerged victorious, only to shutter the remaining stores and carve out Blockbuster's innards.

However, it's hard to see how a debt-saddled DISH can polish up Blockbuster to be any kind of contender.

Learn to spot the enemy
Let's go over some of the recent challengers to Netflix's throne and assess their DEFCON ratings.

  • Time Warner (NYSE: TWX) streaming The Dark Knight on Facebook? Not a threat. These are piecemeal rentals streamed on a PC. This is so 2007.
  • Coinstar's (Nasdaq: CSTR) Redbox promising a digital strategy since last year? It's vaporware, though Redbox's buck rentals paired with a low-priced streaming smorgasbord could make a difference if it's priced aggressively.
  • Amazon.com (Nasdaq: AMZN) offering Prime subsidized shipping members unlimited streams at no additional cost? This is a serious contender. Prime already has millions of shoppers paying $79 a year for free two-day shipping. The rub here is Amazon's likely inability to match Netflix's digital catalog.
  • Time Warner Cable's (NYSE: TWC) push to offer many of its broadcasting channels as live iPad streams? It will be a compelling retention tool for Time Warner Cable, but it's hard to compare Netflix's $8 a month streaming to the typical Time Warner video subscriber paying nearly $75 a month.

Dishbuster doesn't make anyone tremble with fear
Where would you rank the Dishbuster threat?

If DISH uses Blockbuster's digital prowess to create a satellite television service with a strong streaming component, this would primarily be a threat to rival cable and satellite TV providers. It would essentially be raising the bar on what Time Warner and Comcast's (Nasdaq: CMCSA) Xfinity are now doing.

If DISH decides to keep the two offerings separated, even as it turns on the spigot of cross-promotional opportunities, it wouldn't make Blockbuster any more competitive relative to Netflix.

Blockbuster is a ticking time bomb. There's a reason why DISH was able to walk away with a ubiquitous entertainment brand for just pocket change over what liquidators were willing to pay to gut it whole.

DISH can't afford to get cute here. Every passing quarter makes optical discs less attractive as a bricks-and-mortar theme. It can whack prices to compete with Redbox, but that will only speed up the fiscal bleeding. The same can be said for revisiting the low-priced Netflix-esque offering that ultimately led to its bankruptcy filing.

If DISH's plan is simply to try to get the shrinking number of Blockbuster in-store renters to install DISH satellite systems before handing over the chain's inventory to liquidators, it better hurry. The ticks will count down even faster if customers sense the bait-and-switch demise.

Regardless of the scenario -- and DISH is entitled to keep its playbook to itself -- there is no setting where Dishbuster threatens Netflix. Everyone mistaking this soup kitchen for Netflix's smorgasbord needs to get their palates checked.

What do you think DISH will do with Blockbuster? Share your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz can't remember the last time he went into a video store for a rental. He does not own shares in any of the stocks mentioned in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.