Going for broke?
Long-suffering video rental chain Blockbuster is reportedly readying itself for a mid-September bankruptcy as it has struggled to survive with the wider use of postal and on-demand rental services.
According to the Los Angeles Times, execs from Blockbuster, its top debt holders and six movie studios met up to mull a ‘pre-planned' bankruptcy for next month.
Many high streets might soon see a Blockbuster-shaped hole as consumers have ditched their local store and quickly embraced services like Love Film and Netflix, offering films to download immediately, or at least receive in the post on a subscription basis.
Blockbuster's reveune reportedly plunged 20 percent for the second quarter to $778m. Meanwhile, its net losses soared 86 percent to $69m as it shut down over 500 stores, while it's remaining 5,800 shops scattered across the world were not looking too perky.
Despite its ailing state of affairs, the company is believed to have signed new deals to differentiate it from Netflix, for example, a promotion with film studios Warner Bros, 20th Century Fox and Universal Pictures where it gets releases 28 days ahead of its rival.
The rental store reportedly has one last ditch plan for survival by restructuring its massive $1bn of debt and dodge leases on 500 of its almost 3,500 stores in the US, while staying friendly with the film studios to ensure a steady flow of new releases to its shops.
Blockbuster has hemorrhaged $1.1bn since the beginning of 2008, while crippling interest payments on its $920m of debt stopped it from expanding. It has reportedly recently extended a deal with its debt holders to hold off on interest payments until the end of this month while it tries to recapitalise.
Despite any last bids for survival, people in the know told the newspaper Blockbuster will most likely go bust via a ‘pre-planned bankruptcy,' which means most of the company's creditors would know the score ahead of time including Blockbuster's most important debt holders plus the movie studios.
