The bidding war for Blockbuster went on well into the night. DISH Network's
Battling a motley crew of bidders that included liquidators, Carl Icahn, creditors, and South Korea's SK Telecom
The synergies are fairly obvious. DISH can aggressively market its satellite television service to the aspiring couch potatoes who frequent Blockbuster stores for a quick fix of temporary celluloid. DISH can also cash in on Blockbuster's brand, giving it more entertainment clout than leading satellite television rival DIRECTV
Through Blockbuster, DISH will be able to reach beyond its 14.1 million existing subscribers.
Obviously, this doesn't change the real problem at Blockbuster. Folks just aren't renting DVDs the way they used to. Will DISH make a material investment in improving the roughly 1,700 stores still standing? Is it good for the money? This is the same DISH that is likely in a nine-figure hole for trampling over TiVo's
I'm not just talking about the $228 million that DISH will have to shell out for Blockbuster after adjustments for available cash and inventory. The chain isn't exactly in "move in" condition. It's a fixer-upper, and that won't come cheap.
Blockbuster stores are unlikely to survive for too much longer if they stick to the current formula. Physical distribution of movies and video games is a dying business. It's true that GameStop
Blockbuster will have to become more of an entertainment retailer if it wants to keep its stores afloat, and that will mean more than renting out Saw X and pitching satellite television subscriptions in a few years.
Good luck, Ergen. You're going to need it.
How would you save Blockbuster if you had the top bid? 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. 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.