Charlie Ergen, a man known for his poker prowess, is making another big bet on home video entertainment.
This time, his Dish Network Corp. 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. and cable MSO rivals.
However, the deal does put Dish in league (at least temporarily) with some large cable operators. Last year, Comcast Corp. 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. 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. while giving its own satellite TV subscribers access to a sizable VoD library.
For a glance at Blockbuster's recent history, including its connections to the cable industry, please check out:
â€” Jeff Baumgartner, Site Editor, Light Reading Cable