This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

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

Stocks in this article: BBI

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.

>To follow the writer on Twitter, go to http://twitter.com/jpoggi.

>To submit a news tip, send an email to: tips@thestreet.com.

RELATED STORIES:


6 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,708.60 +247.28 1.50%
S&P 500 1,956.11 +29.00 1.50%
NASDAQ 4,460.2290 +77.3820 1.77%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs