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NEW YORK — At his final shareholder meeting as Blockbuster CEO, John Antioco on Wednesday continued to defend his company’s Total Access online and in-store rental initiative, while key investor Carl Icahn had strong words for Netflix Inc., which he said recently criticized the low pricing of the service.
“I should give a report on how Netflix is doing,” Icahn said. “I’d like to know what the hell they’re doing over there and how they’ll compete with our stores.”
Antioco said he was in a “reflective” mood as he prepares to step down by year’s end after 10 years. After the meeting, he said that after a stint relaxing on his ranch in East Texas, he plans to stay in retail. He said he will work with the board to find a replacement, keep a stake in Blockbuster and joked that he could come back to future shareholder meetings as an “agitator.”
Talk of Total Access dominated the proceedings, however. During Blockbuster’s first-quarter call last week, Antioco revealed that while the service is a hit with consumers and has grown to 3 million users, it cost Blockbuster $70 million in quarterly marketing costs, dragging the company to a $46.4 million loss.
Antioco and Icahn said the company has no other choice but to push the online business and that its stores present a clear advantage over Netflix. “Total Access is a game-changer,” Antioco said. “We must have the courage and focus to see it through.”
Antioco presented a scenario that put the number of subscribers at 4.5 million by year’s end and 5.5 million by the end of 2008. He stopped short, though, of offering a prediction on when the service would be profitable.
Icahn, who was given the floor by Antioco during the question-and-answer session, said he “100%” agreed with Antioco’s strategy because business at the stores continues to “melt away.” He bristled at criticism from Netflix and reports talking down Total Access.
“In the long run, this could be one of the great investments,” Icahn said. “If anything, I believe we should be even more aggressive.”
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