Dish Network Corp won Blockbuster Inc in a bankruptcy auction for about $320 million, boosting the satellite TV provider’s online features and marketing reach.
Dish, the second-largest U.S. satellite TV company after DirecTV, trumped at least three other bidders, including activist investor Carl Icahn, for the one-time leader in video rentals.
Dish said the deal, which includes more than 1,700 Blockbuster stores, gives it new ways to market its services. The satellite company could use Blockbuster’s online business as a base for delivering movies, analysts said.
“Maybe they can do an even better job with Blockbuster online in terms of deals with steaming video,” said Berliner.
While Dish will likely absorb some initial losses from the stores, Berliner said the deal has upside.
“They have to continue to move gradually out of bricks and mortar store and get more into online and take advantage of that opportunity,” Berliner said.
Blockbuster had a market cap of more than $5 billion at its peak in 2002, but came under pressure from mail-order and digital competitors such as Netflix Inc.
Blockbuster filed for bankruptcy in September with a proposal to exit bankruptcy under the control of a group of investors that included Icahn and several hedge funds.
However, those investors never agreed on a business plan and after poor holiday sales, they withdrew their backing and Blockbuster was put on the auction block.
Icahn has long been an investor in Blockbuster, and resigned from the board last year. He recently wrote in a letter to the Harvard Business Review that Blockbuster was the “worst investment I ever made.”
The winning bid must be approved at a hearing in federal bankruptcy court on Thursday.