The Death of DVDs

Circuit City's (CC - commentary - Cramer's Take) disastrous results in big-screen television prices weren't all that ailed the company in its third quarter. DVD sales, or the decline of them, took my breath away. (Only Rich Greenfield's Pali Research report this morning seemed to note this unbelievable decline.

Digital downloads have taken over, and they are doing the same thing to the profit in DVDs that they did to the profit in music.

Given the price differential of DVDs vs. video on demand, this is a potentially huge hit for movie studios, which have feasted off this business. Some are insulated: Universal is buried within GE (GE - commentary - Cramer's Take), and Warner is deeply hidden within Time Warner (TWX - commentary - Cramer's Take), which has the cable play anyway.

But who wants to be in a DreamWorks (DWA - commentary - Cramer's Take)? Does this make Disney (DIS - commentary - Cramer's Take) less viable as a core long here?

I think so. This decline is not yet in the numbers. It will be shortly.

Look out below.

Random musings: Is Circuit City a candidate for private equity? Of course, everything is. But I don't think the company wants to let go. So that's not a reason to hold it.

General Electric owns CNBC, for which Cramer is a featured commentator. At the time of publication, Cramer had no positions in any of the stocks mentioned in this column.

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