Bankrupt Blockbuster Agrees To $290 Million Sale

Movie rental company hopes sale will start auction process

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    Dallas-based Blockbuster Inc. agreed on Monday to a $290 million offer by a group of investors to bring the video rental company out of bankruptcy. The group includes some of Blockbuster’s largest creditors.

    Blockbuster hopes the deal, known as a "stalking horse" bid, is just an initial offer that will lead to an auction and a higher purchase price.

    Bankrupt Blockbuster Agrees To $290 Million Sale

    [DFW] Bankrupt Blockbuster Agrees To $290 Million Sale
    Blockbuster agreed to a $290 million offer to bring the video rental company out of bankruptcy. (Published Monday, Feb. 21, 2011)

    But some experts cautioned it could also lead to the end of the once-dominant movie rental giant.

    “The creditors want their money somehow, whether they get their money by selling Blockbuster to someone else or just liquidating the company,” said Mike Davis, a professor at SMU’s Cox School of Business.

    The bankruptcy judge overseeing the company’s reorganization must approve the sale and auction.

    In a statement, Blockbuster said it expected to finalize a deal by April 20.

    The company lost money for years to companies like Netflix and Redbox. Critics said Blockbuster was slow to keep up with changing technology that allows customers to download movies online.

    Davis said Blockbuster is still a big brand and enjoys a loyal following of customers who prefer to rent DVD’s from a store.

    But he added that predicting the company’s future is difficult.

    “We live in this world where a business that's viable one year can just be in big trouble the next,” Davis said. “Technology changes that fast. So there's certainly the possibility -- I don't think it'll happen -- but there's the possibility that Blockbuster will just disappear."