Light Reading

Dish's Latest Buy Is a Blockbuster

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Charlie Ergen, a man known for his poker prowess, is making another big bet on home video entertainment.

This time, his Dish Network LLC (Nasdaq: DISH) has emerged as the winning bidder for bankrupt video rental firm Blockbuster Inc. Dish, a satellite TV giant with 14.1 million subs, beat out Carl Icahn and others in the court auction with a bid of about $320 million. (See Dish Bids for Blockbuster.)

After certain adjustments to be made at closing, including available cash and inventory, Dish expects to pay roughly $228 million in cash. The deal is expected to close in the second quarter of 2011.

Dish didn't outline its strategy for Blockbuster, but, at this point, does intend to take advantage of Blockbuster's brick-and-mortar retail presence and its Web-based rental and video distribution platform.

"With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network," Dish EVP of Sales, Marketing and Programming Tom Cullen said, in a statement.

Why this matters
The buy could give Dish a leg up at Blockbuster's retail locations and elbow out DirecTV Group Inc. (NYSE: DTV) and cable MSO rivals.

However, the deal does put Dish in league (at least temporarily) with some large cable operators. Last year, Comcast Corp. (Nasdaq: CMCSA, CMCSK) forged a deal to complement its video-on-demand (VoD) business with a by-mail product offered in tandem with Blockbuster. Before that, Blockbuster hooked up with Suddenlink Communications and Mediacom Communications Corp. under a deal that called for the MSOs to rebrand their VoD services under the Blockbuster name and to promote their services in local Blockbuster stores.

Beyond the cross-promotion potential at retail, the deal also will help Dish expand its presence on an array of TVs, Blu-ray players, TiVo Inc. (Nasdaq: TIVO) DVRs, PCs, game consoles and other Internet-connected consumer electronics devices that have integrated the Blockbuster On Demand service. In that area, Dish could offer a more financially sound competitor for Netflix Inc. (Nasdaq: NFLX) while giving its own satellite TV subscribers access to a sizable VoD library.

For more
For a glance at Blockbuster's recent history, including its connections to the cable industry, please check out:

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:08:33 PM
re: Dish's Latest Buy Is a Blockbuster

Some updates on cable's connections to Blockbuster :

<li>Comcast's DVDsByMail promo with Blockbuster&nbsp;remains active, but&nbsp;still carries&nbsp;the "beta" label. </li>
<li class="MsoNormal" style="margin: 0in 0in 10pt; color: black; line-height: normal; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Mediacom's co-marketing deal with Blockbuster "really didn't get anywhere," a spokesman says, noting that the MSO did end up running some cross-channel spots and putting up some kiosks in a few Blockbuster stores, but that was the extent of it. </li>
<li class="MsoNormal" style="margin: 0in 0in 10pt; color: black; line-height: normal; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; mso-list: l0 level1 lfo1; tab-stops: list .5in;">Suddenlink, which was to start off with some co-branding in its West Virginia system, declined to comment. Late last year, the MSO said it intended to offer over-the-top services from Blockbuster with its new TiVo box "in the coming months." </li>


User Rank: Light Beer
12/5/2012 | 5:08:30 PM
re: Dish's Latest Buy Is a Blockbuster

Imagine if Charlie Ergen bought or teamed up with Blockbuster back the 1980s. It would've been a nice place to sell C-band satelite dishes. If Dish Network had that retail presence before DirecTV debuted in 1994, the industry could look much different than it does today.&nbsp;


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