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Blockbuster's Rise and Fall: The Long, Rewinding Road

Antioco and Icahn had different views on how to revive the business; Antioco scrapped late fees, started an Internet service and wanted to keep the company independent, while Icahn wanted to sell out to a private-equity firm.

Eventually Antioco became fed up with battling with the board, especially after Icahn and his crew decided to "use discretion" to cut Antioco's bonus in 2006. The next year, Antioco stepped down and was replaced by James Keyes, former head of 7-Eleven.

Act 6: Blockbuster Goes Bust
During his first few years on the job, Keyes slashed costs, tweaked product and aggressively marketed online and digital services, managing to briefly return Blockbuster to profitability. The company changed its image from "Blockbuster Video" to "Blockbuster Media," and once again experienced sales growth.

Still, the bed for bankruptcy has already been made before Keyes took over, when in early 2007 the company had missed a bank covenant and had to renegotiate its credit terms for the fourth time. The company had been relying heavily on a $400 million credit, which expired in August 2009.

Blockbuster also still owed a substantial amount of debt to former parent Viacom. A few quarters of profit weren't enough to revive the company, which sustained more than $4 billion in losses since 2001.

And then, of course, the recession set in, which only served to further hinder the already decaying business.

By March of 2009, bankruptcy fears were emerging, and a year later Keyes warned that if Blockbuster was unable to shore up enough cash to repay its nearly $1 billion in debt, it could be forced to file Ch. 11.

Since then, Blockbuster has shuttered hundreds of stores, Icahn has resigned from the board of directors and sold off most of his stake in the company, and the stock has been delisted from the New York Stock Exchange.

Now investors wait to see if Blockbuster will be able to make a $42 million debt payment due on Sept. 30, which it has pushed back two times so far. But the company may not make it until then, as reports have surfaced that a bankruptcy filing could come any day.

Still, the credits aren't rolling for the Blockbuster movie just yet -- and while this is one story that's unlikely to have a fairytale ending, it's destined to become a classic.

--Written by Jeanine Poggi in New York.

>To contact the writer of this article, click here: Jeanine Poggi.

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