Blockbuster shares jump 20%
Stock rises after announcement about new deals with studiosBlockbuster shares surged 20% on Wednesday, as investors rewarded the company for striking deals with studios that could help it stave off bankruptcy.
The company's shares, decimated by 62% just in the first quarter -- leading all losers on The Hollywood Reporter Showbiz 50 index -- closed at 30 cents Wednesday and were up another penny after the closing bell. Broader markets were lower on the day.
On Tuesday night, Blockbuster said it had reached agreements with home-entertainment divisions of Fox, Sony and Warner Bros. giving the studios first liens on Blockbuster Canada's assets. In exchange, Blockbuster gained access to new-release DVDs from the studio distributors, meaning some movies will be available for rent at Blockbuster four weeks before they are available at Netflix or Redbox.
Financial details were kept under wraps. But terms also tinker with payment schedules, benefiting Blockbuster upfront and the studios at the back end, sources said.
Blockbuster disclosed a month ago it might have to file for bankruptcy if it can't manage its roughly $1 billion debt. Last week, the chain warned the New York Stock Exchange could delist the stock due to its low market capitalization.
Even after Wednesday's 20% rise, Blockbuster's market capitalization was less than $63 million.