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. >To follow the writer on Twitter, go to http://twitter.com/jpoggi. >To submit a news tip, send an email to: email@example.com.
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 + 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