Blockbuster inks deal with WB, Sony, Fox
Pact includes day-and-date delivery of DVD rentalsTroubled Blockbuster has struck a deal giving Warner Bros., Sony and Fox a first lien on its Canadian assets in exchange for day-and-date delivery of DVD rentals for movies from those studios, as well as payment terms that are tweaked to favor Blockbuster up front.
The deal was announced late Tuesday after the closing bell on Wall Street. Blockbuster shares fell 7% during the regular session to 25 cents and gained a penny in after-hours trading.
Blockbuster is doing what it can to avoid bankruptcy, and studios seem eager to help out. Warners already had said it was giving Blockbuster movies 28 days before Netflix and Redbox and altering payment terms to relieve Blockbuster of some financial burden during the near term, while making it up to studios in the long term.
Now, Sony and Fox are following suit, though exact terms of the deal weren't made clear Tuesday.
"These positive signs of studio support are part of our overall recapitalization effort to drive top-line performance while reducing debt and operating costs at Blockbuster," Blockbuster CFO Tom Casey said. "This affirms our strong and collaborative business relations with these critical vendors."
The first two movies under Blockbuster's new arrangement with Warners were "The Blind Side" and "Sherlock Holmes."
Arrangements that guarantee Blockbuster can rent movies the day they go on sale are a big deal, given a trend of holding back new releases from Redbox and Netflix, the competitors that have contributed to the dire straits that have engulfed Blockbuster.