Healthy boxoffice hurts Blockbuster

Jim Keyes: Consumers forgoing rentals for theater

What has been great for the exhibition industry has been a drag for Blockbuster this year.

Jim Keyes, the video rental chain's CEO, said Thursday that a 14% surge in theater attendance in 2009 means consumers are forgoing rentals in favor of going to the movies.

Keyes said as many as 3 million more movie tickets are being sold in the U.S. each week this year compared with 2008, and that's one reason Blockbuster reported financial results that spooked investors.

Blockbuster shares, which rose 11% to $1.14 during Thursday's regular session, plunged as much as 30% during after-hours trading when its first-quarter results were revealed.

The company earned $24.9 million, 42% less than during the year-ago quarter, on revenue that dropped 20% to $1.2 billion.

Beyond the surging boxoffice, Keyes said a punitive currency exchange rate and a "very, very weak title slate" also hurt.

But he did not lower the company's full-year guidance, suggesting that improvements are on the horizon including "some really good, strong titles coming up in the summer" and an aggressive advertising campaign this quarter and next.

Blockbuster said it completed its $250 million line of credit, assuaging fears the company might have had to seek bankruptcy protection.

Keyes also talked up the company's efforts to land exclusive titles. "Baby on Board," for example, was available at Blockbuster 30 days before its scheduled DVD release June 2.