Monday Morning – Got Tonight's Video?
One of the Techno-Era's major players in the retail business will begin it's slide into memory and away from the shopping centers today. Video rental pioneer Blockbuster will be auctioned off today as the final step of its bankruptcy procedings takes place. The former giant was too slow to get into the forefront of the next wave of video distribution and not only lost major customer share, but took a couple of wrong turns and ended up with billions of dollars of debt and could not recover.
Blockbuster was the creation of a Dallas, Texas, man who opened his first store in 1985 and skillfully grew the business while opening retail outlets across the country. Early in the home video recording/viewing times, the bulk of video rentals were neighborhood mom-and-pop stores. Remember those? What a fascination that was.
Videotapes were way too expensive for the average person to purchase, but with the rentals anyone could pick up a movie and take it home for the night to enjoy. This was also the beginning of the massive desertion of movie theater audiences. That was truly a shift in the social habits of the public.
Blockbuster soon took control of the video rental trade and the dollars came rolling in. After the business was sold and resold a few times, entertainment giant Viacom bought the business in 1994. Years later Viacom sold it to other entrepreneurs including Icahn. When the chain reached its peak in 2009, they had 5,000 retail outlets in the U. S. and 17 other countries, and 60,000 employees. Yet just one year later, in September 2010 they were forced into bankruptcy and after a failed attempt to reorganize, the judge gave them permission to liquidate via this auction.
Today's sale will be the end because bidders are only permitted to bid on individual parts of the business, such as the U.S. stores, the overseas operation, or the digital side (streaming, downloading, etc.) of the business. Most of the bidders are major creditors of the company, such as famed corporate raider Carl Icahn and a handful of asset management funds, investment speculators, and hedge funds. Altogether, according to insiders, there is expected to be up to ten interested parties bidding on portions of the company.
One of the expected bidders is a South Korean mobile phone service, SK Telecom, and interestingly a preliminary bid has been place by Dish Network, the satellite tv provider. Wall Street watchers note that Icahn will probably do what he does best, if he obtains part or parts of the firm, and just package it up into pieces and sell off the assets individually. It is unlikely that some of the successful bidders will partner up and try to keep the retail chain going. And looking around the shopping plazas, it appears that storefront video rental is going the way of the village smithy.
Now let's take the way to the apparatus and get this equipment checked out. I need to get some more coffee started before we meet back in the day room.
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Also on FireGeezer…
- Morning Lineup – April 5 – April 5, 2011
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