Cable Tech

Can Cable Save Blockbuster's Bacon?

5:10 PM -- Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s newest pal, Blockbuster Inc. , buckled a bit more at the knees today, needing more time to forge a new recapitalization deal with its debt holders.

The new deal gives the video chain until the end of September to do that, marking the second such extension, and putting it perilously closer to bankruptcy.

The time extension came as the company reported a 20 percent dip in revenues, to $799 million, with a net loss of $69 million, widened by 86 percent. It's also being crushed by a $920.4 million debt load.

Blockbuster has been looking to the cable industry to help fix its business, signing co-marketing deals with Comcast, Suddenlink Communications , and Mediacom Communications Corp. . Among them, Comcast is already offering discounts for Blockbuster's DVD- and game-by-mail service, and testing out some in-store promotions in Blockbuster stores in Portland, Ore. (See Comcast Enters the DVD-by-Mail Game and Blockbuster Busts Out Cable Deals .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

paolo.franzoi 12/5/2012 | 4:26:45 PM
re: Can Cable Save Blockbuster's Bacon?


Blockbuster was a money laundering scheme.

Huizenga was in Garbage Collection (Waste Management) and then started an all cash, no inventory turnover business.



rjmcmahon 12/5/2012 | 4:26:44 PM
re: Can Cable Save Blockbuster's Bacon?

Remember when Enron and Blockbuster announced a deal where they were going to VoD all the movie titles?  Guess they never had those rights but that didn't stop Wall St. from using our 401K money to invest in both.

It all goes to show how silly the "content" business really is, in the face of reality.  I suspect all the gas used to drive to and fro BB cost more than stamping more DVDs yet BB thrived on "distribution" control obtained by negotiating revenue share with Hollywood after establishing something like 4000 retail locations.  Before that, there were artificial shortages all due to even sillier Hwood licensing.

Here we are again trying to use distribution to "monetize" what's inherently a non rivalrous good.  The trick has been to use distributors create exclusion.  It would be so much more staightforward if we as consumers merely paid and honored the rights holders per their requests.  If we don't like their terms, don't pay. 

Instead we play these silly games to create "financial signals" where they don't really exists and the down side is that optimal behaviors lose out to shenangigans.  It seems similar to why the real economy hasn't recovered (as measured by job creation and real GDP growth) because the financial sector has been pretty much a farce.

Fixing this is pretty simple.  Turn the 4000+ BBs into colos and run some fibers there and those empty spaces would be useful again.

Jeff Baumgartner 12/5/2012 | 4:26:32 PM
re: Can Cable Save Blockbuster's Bacon?

Enron-Blockbuster -- wow, that's a good one to pull out of the Waybackmachine.  Given where things stand today, the idea they proposed back then does make some sense, though. 

But I like your idea of turning those stores into distribution hubs... they already have one of the piece parts for a BB CDN  ;)



rjmcmahon 12/5/2012 | 4:26:28 PM
re: Can Cable Save Blockbuster's Bacon?

The problem is that the information distributors are so conflicted they can never behave in an honorable way.  They are being asked to enforce intellectual property rights for non rivalrous goods and getting paid by private sector players, who make the rules, for doing so.  Think of it like selling your local police force to private investors, investors tasked with maximizing profits in any way they can, and where the "laws" the police enforce are also written by the same private investors.  It wouldn't be long before the police force turned into criminals and stole rather than apply justice equitably (which happens in many under developed regions and within our financial sector.)  We put the police force into the public sector because the public interest of equitable justice trumps private interests of maxmizing profits.

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