Blockbuster's Rise and Fall: The Long, Rewinding Road
Blockbuster, for its part, was keenly aware of the impact the Internet could have on business, and did jump at the opportunity to capitalize on this new technology. The company formed a partnership with AOL (AOL), took initial steps toward streaming video, tested home delivery, rolled out e-commerce and formed a partnership with TiVo and DIRECTV.
Still, while Blockbuster discussed creating its own subscription service to rival Netflix, it wasn't until August 2004 that its online DVD rental program actually started in the U.S. And when, in 2004, Coinstar (CSTR) entered the market with its Redbox DVD kiosks, Blockbuster didn't begin installing similar devices until 2008.
And analysts also criticized the company for its late adopting of the DVD. In August 1999, a mere 1,000 Blockbuster stores carried DVD copies.
Act 6: Enter Stage Right -- Carl Icahn
In December of 2004, Blockbuster sought control of its biggest rival, the now defunct Hollywood Video, through a hostile takeover. Billionaire investor Carl Icahn was intent on seeing this deal done, and attempting to facilitate the takeover by becoming the largest shareholder of Blockbuster, with 9.98 million shares worth about $83.9 million.
Blockbuster proposed an offer of about $700 million, or $10.25 a share, later upping the bid to $1 billion. But Hollywood Video instead agreed to be bought out by Movie Gallery in January 2005.With so much invested in Blockbuster, and a Hollywood Video deal squelched, Icahn looked for ways to beef up Blockbuster's return, butting heads with Antioco in the process. In May 2005 Icahn waged a successful proxy fight to add himself, and two other members, to the board. Icahn accused Blockbuster of overpaying Antioco, who received $51.6 million in compensation in 2004.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV