Blockbuster Bullied by Shareholder

Blockbuster is speaking out against one activist shareholder who is seeking election to the board of directors.
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is urging shareholders to ignore one dissident shareholder's request to be elected to the board of directors.

Gregory Meyer has asked shareholders to reject the board's recommendations and add him as an independent voice instead.

Blockbuster responded to this request on Monday, saying Meyer's bid is a "hostile, self-serving proxy contest." The video rental chain also insists Meyer is not qualified for the job and, if elected, would be a risk to the future of the company. His experience includes operating a small kiosk company, which he sold off years ago.

"Meyer wants you to believe that electing him to the board is a low-risk proposition," Blockbuster wrote. "We urge you not to make that assumption. Blockbuster currently faces a myriad of challenges -- from a constantly changing competitive landscape to significant financial and liquidity pressures -- all of which have no quick fixes or easy solutions."

Must Read Best Buy Takes On Netflix, Blockbuster

Still, it's easy to see why shareholders would want to bring a fresh face to Blockbuster's board of directors. The company has been struggling to remain afloat, as rivals like


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Redbox, cut into sales.

Best Buy

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is also ramping up the competition, announcing last week that it will launch its new video download service later in the month.

In the first quarter, Blockbuster swung to yet another loss of $65.4 million, or 33 cents a share, as same-store sales plunged 7.1%.

Earlier in the year, Blockbuster said if it doesn't shore up enough cash to repay its $1 billion in debt, it could be forced to file for bankruptcy.

Still, shares of the company are gaining 4.6% to 37 cents in morning trading.

-- Reported by Jeanine Poggi in New York.

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