On Thursday, Blockbuster filed for Chapter 11 bankruptcy, meaning hundreds of stores will close over the next month as the company restructures.
Through bankruptcy, the company will eliminate about $900 million in debt, leaving the company with $125 million in debt to its senior bondholders. Other bondholders have been wiped out. Blockbuster’s common stock currently trades at 5 cents, meaning for the most part, all long term shareholders have been wiped out, as well.
CEO Jim Keyes said the restructuring will allow Blockbuster to “continue to transform our business model to meet the evolving preferences of our customers.”
Blockbuster has “a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels — stores, kiosks, by-mail and digital,” added Keyes.
The company has about 3000 stores currently, with plans to close up to 1800 over the next year. 1000 closings were unveiled before the bankruptcy.
Throughout the bankruptcy, all stores and kiosks will remain open for current members.
Result for: brand name
US video rental giant Blockbuster just announced the Onkyo BD-SP808 Blu-ray player, set to ship to retailers in September, features a client for their online video service, Blockbuster On Demand.
Blockbuster On Demand is already supported on a handful of players from Phillips, Samsung & Toshiba, as well as a range of other devices including TiVo DVRs and the Archos 605 portable media player. There is also a client for Windows.
Unlike the Netflix Watch Instantly service, which offers unlimited viewing of mostly catalog titles and TV shows, Blockbuster On Demand rents and sells individual titles, including many new releases.
Blockbuster is favored with support from movie studios in the form of earlier access to new releases because this is sees as a tool to keep Netflix and Redbox from dominating the home video landscape. But Blockbuster’s failure to compete with either company has led them to bankruptcy.
Blockbuster’s plans for success in the on demand rental space may also be in trouble if rumors about Apple expanding their iTunes rental operation are true.
Their online offering has neither the brand name recognition of Netflix nor the base of TV-connected clients. From game consoles to Blu-ray players to HDTVs themselves, Netflix clients are everywhere.
Not to mention this year’s introduction of iPad, iPhone & iPod Touch clients. An Android app is also coming at some point in the future.
The widespread availability of the client, especially connected to TVs, has become arguably the biggest driver of recent growth for Netflix.
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Result for: brand name
In April, AOL sold one of the pioneers of instant messaging, ICQ, to Digital Sky Technologies Limited (DST) for $187.5 million USD.
Today, AOL has completed that sale, with Tim Armstrong, Chairman and Chief Executive Officer of AOL saying the company will use the proceeds to either buy media properties or hoard the cash for emergencies.
Despite losing popularity in the United States to other services such as MSN Messenger and AIM, ICQ remains the most popular IM service in Russia and other smaller international markets.
“The acquisition of ICQ is a strategic enhancement of our business in Russia and Eastern Europe. ICQ’s long-standing brand name and its sizeable loyal customer base together represent a very attractive opportunity to further strengthen our position in the region,” added Yuri Milner, Chief Executive Officer of DST.
ICQ was created in 1996 by Mirabilis of Israel, and AOL purchased the parent company in 1998.
Reads the SEC notice: As previously announced, on April 28, 2010, AOL Inc., (the “Company”) entered into a Securities Purchase Agreement (the “Agreement”) with Digital Sky Technologies Limited, a British Virgin Islands company (“Digital Sky”), for the sale of the Company’s ICQ operations (“ICQ”).
