Dish's Baffling Blockbuster

8:40 PM -- Dish Network LLC (Nasdaq: DISH) is set to breathe new life into the corpse of Blockbuster Inc. in a $320 million deal, but the general reaction since the announcement has been: What in the wide, wide world of sports is Charlie Ergen up to now? (See Dish's Latest Buy Is a Blockbuster .)

Sanford C. Bernstein & Co. Inc. analyst Craig Moffett, who follows Dish, noted today that investors will "no doubt, squint and see connections." But for him, "the deal is strategically puzzling."

Exhibit 1A is Blockbuster's shrinking store base and revenues, which dropped 17 percent to $3.5 billion for the 12 months ended Oct. 3. Moffett wonders if Blockbuster will become a cash drain on Dish, since the company intends to use stores as a marketing tool for the satellite TV service, despite incongruities in the sales process: "Would you like a satellite dish with your rental?"

He thinks the more intriguing aspect of the deal is Blockbuster's streaming service, which has struggled but could fit in with Dish's Slingbox service. But Moffett doesn't completely buy that either. "The risk is that the synergies here turn out to be more of a soundbite than a strategy," he writes.

Dish, which has been throwing millions at other bankrupt companies to help build a wireless spectrum story, declined to comment on its Blockbuster strategy, noting that the bankruptcy court hasn't approved the deal yet. Dish believes the deal will close sometime in the second quarter. (See Charlie Ergen's Spectrum Grab .)

Here are a couple of other reactions: