Blockbuster Uses Canadian Stores As Collateral To Make Deal With Fox & Sony

Never you mind Blockbuster has admitted they might need to declare bankruptcy, or that it’s in danger of being thrown off the NYSE, or that its single biggest investor dumped his stock in a 3-day fire sale… the once-majestic video rental giant is still gripping onto life with both of its arthritic hands, having signed deals with two more studios — Fox and Sony — that will allow Blockbuster to make new movies available across multiple platforms on the day of release.

It’s very similar to the deal made with Warner Bros. a few weeks ago and will help the struggling video vendor to compete with on-demand video providers and DVD delivery service Netflix.

Perhaps more important to Blockbuster is that the deals with Fox and Sony is that the studios have restructured Blockbuster’s payment terms, making it easier for the company to restructure as it attempts to avoid going under.

The catch is that, for Blockbuster to get those payment terms from Fox & Sony, it had to essentially offer up all of their Canadian assets — including 459 retail stores — as collateral, giving the studios first lien on these assets.

Do you think this is enough to keep Blockbuster afloat? Or are they just kidding themselves?

Blockbuster press release on the deal