Yikes: Blockbuster Dumps Plan To Buy Circuit City

Blockbuster has finished snooping around Circuit City’s medicine cabinet and the verdict is in: Blockbuster has changed its mind.

Here’s their official statement:

“Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster’s shareholders to proceed with an acquisition of Circuit City,” said Jim Keyes, Blockbuster Chairman and CEO. “We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand. We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment.”

Whatever Circuit City’s got, Blockbuster doesn’t want to catch it.


Blockbuster Withdraws Proposal To Acquire Circuit City
[Blockbuster]
(Photo: Maulleigh )

Comments

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  1. sean77 says:

    Blockbuster already caught it.. just look at Blockbuster’s 10Ks.

    2007: net loss of $73.8 million
    2006: net income of $50.5 million
    2005: net loss of $583.9 million
    2004: net loss of $1.2 billion!
    2003: net loss of $977.3 million

    over the past 5 years, blockbuster has lost $2.8 billion

  2. 6a says:

    Blockbuster could always lease space inside Circuit City, like Starbucks/Barnes & Noble, I suppose

  3. celticgina says:

    They realized they would not honor the 24 min guarantee when they bought the company!

  4. Southern says:

    *Shrug*

    Video Stores are going the way of the Dodo. Why would I want to pay $5.00 to rent a movie for 5 days when I can go to Redbox (or other, similiar rental systems) and get it for as little as $1 (assuming I return it the next day)?

    Then there’s Netflix of course, which is probably the BIGGEST reason BB brick-n-morters are losing money.. I know since I joined Netflix I haven’t been in either a BB *or* a Hollywood Video..

  5. jpdanzig says:

    Ballbuster: another of the worst chains going.

    Their NYC store nearest to me closed a few years ago.

    Just one of the reasons was the ambient temperature inside the store: upwards of eighty degrees year-round. Just the environment to encourage leisurely browsing!

    And then there was the staff, who didn’t know their Hitchcock from their Hancock…

    Thank God for Netflix!

  6. BigBadRAM says:

    Netflix needs to buy Circuit City. I wouldn’t mind paying $29.99 a month to rent a 48″ LCD TV. I would even show my receipt on my way out.

  7. freejazz38 says:

    They both are TEXTBOOK examples of how NOT to run a retail chain. ADIOS to BOTH scumbags

  8. Silversmok3 says:

    Used a Redbox machine last week for the first time.If I were a Blockbuster shareholder I’d be selling so fast I’d break the sound barrier.

    In 10 years Blockbuster will be an exhibit at the Smithsonian.

  9. nick_r says:

    When even BLOCKBUSTER doesn’t want you, it’s time to head for the nearest bridge.

  10. TechnoDestructo says:

    They won’t both fit down the drain together.

  11. Eldritch says:

    I just signed up for Netflix a week ago and already I’ve watched two DVDs. For what it would have cost me to rent just one from Blockbuster.

    The last time I was in Blockbuster, I was seriously unhappy with the service. Plus, they stock a weird assortment of stuff… an entire wall of “The Bucket List” but only one copy of “Across the Universe”? WTF.

  12. drjayphd says:

    @Silversmok3: So now would be the time to sell Blockbuster short, or has that ship sailed?

  13. Bizdady says:

    Havent used a Blockbuster in 2 years since I dropped their online rentals. Right now im loving the Redbox Atm rentals outside my supermarket. $1 rentals work for me. My lil girl loves returning it in the slot lol.

  14. Saydur says:

    Due Diligence = “Yeah, sorry, boss’s nephew wanted to do something important like a merger so we had to pretend like we were investigating. We knew this was a stupid idea from the start, and we’re Blockbuster ffs.”

  15. Silversmok3 says:

    @drjayphd:

    A company that has lost money consistently and shows no sign of turning around does not make a good investment.

  16. synimatik says:

    I haven’t been in a Cockbuster video since they invented them there DVD vidja disks.

  17. humphrmi says:

    Can I be the only one to say that I’m surprised?

    Blockbuster wants to sell retail electronics. They don’t need a brand, they just need a retail outlet big enough to support it.

    From their perspective, a cash hemorrhaging retail electronics company is a perfect fit, because they’re going to come in and rebrand all the stores, dump all the products that don’t enable the sale media content, and oh yeah cut 20% of the workforce. From that perspective, huge losses only make the buying part cheaper.

    So I’m a little surprised, I guess only CC could figure out how to screw this deal.

  18. Concerned_Citizen says:

    If you want to rend a dvd locally go to the library. I wouldn’t doubt if libraries carrying dvds had an effect on blockbusters failure. The libraries in northwest indiana all carry a larger selection than blockbuster and carry new titles. And you pay nothing to rent.

  19. We don’t rent movies often. We do (very rarely) go to the movies. When going to the movies is cost or time prohibitive (as it is increasingly becoming) we go to BlockBuster (last minute) with the intent of renting a flick and always end up leaving with 4 new purchases from the 4/20$ bin instead. We’re boring people anyways so a date night inside of the house is just as good as one outside. Aside from that we have no use for BlockBuster and I’m astonished they, Hollywood Video, and Movie Gallery are still in business. Netflix and Redbox have rentals wrapped up in the best possible ways.

  20. There's room to move as a fry cook says:

    The Redbox machines near me have long lineups in the early evening. The local Blockbuster must be hurting bad.

    [en.wikipedia.org]

  21. Joedragon says:

    @Southern:
    $5 costs less then cable on demand movies and you get the full DVD with more rent time and Redbox at $1 for 24 for the full DVD kicks cables ass.

  22. Jesse says:

    @Southern:

    The mail DVD service is taking a huge toll on brick and mortar video rental places. Blockbuster had a good alternative to Netflix going but then they switched strategies and jacked the price up on their Total Access program.

    I don’t think I’ve paid for a traditional movie rental in at least 6 years.

  23. Roundonbothends says:

    I’m one of the rare people not unhappy with Blockbuster. I live out in the woods. Our (small) local Blockbuster packed it in last year. Despite good foot traffic, they got in a dispute with the landlord. (Some other businesses did, too, so now we have a half-entry strip mall.)

    So I chopped my plan down to 3-out, and Blockbuster has done exactly what they agreed to do. Now instead of paying them $23/mo for 3-out and 3-trades, which was fun while it lasted, I’m paying them $17/mo and getting a little over 4 DVDs per week.

    It will be a while before fast enough internet to download movies comes out to the sticks, so this is about as good as I expect it to get right now. Ma AT&T may be surprised when WIMAX arrives. I may live in the middle of nowhere, but I do have an interstate running through my back yard. :-)

  24. “Whatever Circuit City’s got …”

    Pretty sure it’s syphilis.

  25. There's room to move as a fry cook says:

    Hmmmm, I think I have a solution to retailing, the universe, and everything…. is there a market for a coffee shop that rents DVDs and sells big screen TVs?

  26. @Eldritch: Don’t worry, they saved you there.

  27. ian937262 says:

    @Southern:

    Blockbuster has a plan that costs me $32 and some change for two out at a time unlimited. Between my wife and I we are there almost every other day. 32 / 30 movies(approx) is just over a dollar a movie. any time of the day

    Netflix is great for hard to find, Blockbuster is great for the rest.

    Oh and I’ve never rented a movie from ‘Blockbuster that was broken. Unlike netflix where I had to wait another 2 days to watch the movie I wanted.

  28. humphrmi says:

    @Concerned_Citizen: yeah, your comment had everything to do with this post. Thanks.

  29. kyle4 says:

    I have a library I can walk to that has over 200 DVD’s and to my surprise they’ve gotten new ones that come out only two weeks after they’re released. They just got Rambo, they have movies like Cloverfield and There Will Be Blood etc. I just walk there, take out the up to six limit, and than return and repeat. No need for Blockbuster when you can get the movies for free.

  30. VeeKaChu says:

    @IfThenElvis: I have noticed that too- I’ve been seeing the Red Box machines for a couple of years now, but it’s only in the last couple of months that I’ve been regularly seeing long queues to use them.

    So yes, Blockbuster, be afraid. Be very afraid.

  31. GeoffinAround says:

    I agree that this is surprising news. CC & BB are two wobbling, slow, inept businesses that could use a joint fresh start with a new brand & profit model. Lots of brick-&-mortar assets & consumer awareness. A merger would make a lot of sense on the surface.

    My guess is that BB has just decided to wait. CC will only plummet further… their share price is so low that if you spent your grocery bill on CC stocks you would become majority shareholder. BB can make a shrewd purchase just a bit down the road, where it will probably meet CC in the dry well of Chapter 11, next to Sears.

    Good to see companies like Netflix, with innovative business models that continue to evolve. Online movie rental downloads are going to be huge when consumers adopt it & the movie library matches DVDs.

  32. Televiper says:

    @kylo4: Sure that’s not 2,000. 200 is about the size of a home library. Not many DVDs in that.

  33. kyle4 says:

    @Televiper: It’s still better than nothing, and I save $6 for each and every single one of those movies I take out for free. Most of them are movies I want to see but won’t buy, the ones I want to buy I’ll get used at BB for $9.99.

  34. PinkBox says:

    I’m awful. I use Netflix and I also tend to go to Blockbuster several times a month.

    This is what happens when you get tired of watching regular television and resort to watching series on DVD instead.

  35. PinkBox says:

    @Roundonbothends: My local Blockbuster is offering a “Unlimited 1 out at a time!” plan for $21 a month.

    Seriously!

  36. Ben Popken says:

    This is like hearing lima beans and cod liver oil don’t go well together.

  37. TonyTriple says:

    I wonder how bad CC is tanking. Time to get my resume in order?

  38. Forkboy3 says:

    I live in an area that has Best Buy, Circuit City and Fry’s Electronics within about 2 miles of each other. Best Buy and Fry’s are always packed. Circuit City is a ghost town. It’s actually depressing to walk into the Circuit City. It’s dark, the shelves are empty, and you get the feeling that it’s getting ready to go under…..not someplace you want to fork over $2,500 for a television.

    My guess is their losses are actually much greater than they are showing on paper and that after the Christmas holiday, they will start shutting down many of their stores.

  39. Notsewfast says:

    @drjayphd:
    At $2.60, the ship has sailed. The lowest the thing can go is $0, which makes your upside at maximum $[current price-0] per share and your potential downside infinite. Not that blockbuster will turn it around, but the potential gain ain’t worth it.

  40. strife1012 says:

    Come on Layoffs, I want to get laid off. Did I mention in all of the earlier posts I hope we get laid off.

    “The Beatings will continue until moral improves”

    Actually I hope we close stores. When CompUSA was closing its doors Best Buy and Circuit City Store Managers walked in and tried to hire them right off the floor. CompUSA responded in a $2 an hour raise until the store was closed.

  41. radiochief says:

    Redbox is very nifty. You can go online and reserve movies. Want to rent something is coming out? Go on the rebox site at 7am on Tuesdays, check your local kiosks and reserve.

    Go there and pick up. Apply any promo codes you got. Seamless… It’s better than Velcro!