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Dish Network to buy Blockbuster

A Blockbuster video rental store is a rare sight these days. And it's going to get even rarer. (Los Angeles, Calif.)

Bob Moon: When Blockbuster Video went on the auction block this week, a lot of people were wondering: Who would want to buy such a seemingly antiquated business teetering on liquidation? Turns out Dish Network saw something on the plate.

Early this morning, the satellite service agreed to buy Blockbuster in a bankruptcy court auction for $320 million. From Silicon Valley, Marketplace's Steve Henn takes a look at plans for the once-dominant movie rental business.


Steve Henn: For half a decade now, Blockbuster has been a dead man walking in the movie business. Netflix destroyed it, first offering movie rentals through the mail and then streaming movies online. Meanwhile, Blockbuster was saddled with leases for thousands of increasingly deserted stores.

So when news hit that the Dish Network was paying real money for Blockbuster, most analysts and reporters slapped their head and had the same thought: What in the world are they thinking? But Todd Mitchell at Kaufman Bros. believes this move is brilliant.

Todd Mitchell: I think this could potentially be a game changer. This is one of the most interesting things I've seen in a long time in this space.

Mitchell says Dish gets two big assets in this sale: Blockbuster's existing customer base and the rights to stream thousands of movies online. If it rolls that into a Dish Network's subscription, he thinks the company could create a powerful competitor to take on Netflix.

Thomas Eagan: It's possible for them to create a similar service.

Thomas Eagan is at Collins Stewart. He says if Dish builds a streaming service:

Eagan: The bulk of that will be created by existing content deals they have through Blockbuster. The question is, will they be able to keep those going? And that's unclear.

Eventually the Dish Network and Blockbuster will have to sign new studio deals. And buying the rights to stream movies online is getting much more expensive. Just this morning, Netflix paid $100 million for the rights to "Mad Men." And Eagan isn't convinced the Dish Network generate the kind of cash it will need to compete.

In Silicon Valley, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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