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Charlie Ergen: Blockbuster Stores Too Big Just for Video

20 Feb, 2013 By: Erik Gruenwedel

Dish Network chairman says existing 500 Blockbuster locations represent premium retail opportunities for ancillary products

Blockbuster LLC continues to operate under the microscope of parent Dish Network, with the satellite TV operator determined to extract incremental revenue from the iconic brand while mindful of the bottom line, said Dish chairman Charlie Ergen.

Fielding media questions for the first time on Dish’s Feb. 20 fourth-quarter fiscal call, Ergen reiterated previous comments about utilizing Blockbuster stores to launch wireless products. With regulatory delays and other issues hindering rollout of proprietary wireless spectrum, launching products such as mobile phones hasn’t materialized.

Dish, which acquired Blockbuster out of bankruptcy in April 2011, currently markets satellite TV subscriptions in Blockbuster stores.

“The stores are just too big for video only product, although the ones we have left have enough volume to support that,” Ergen said. “We’ll just continue to evaluate Blockbuster. But we’re also evaluating where we are in other businesses.”

Blockbuster last month said it would shutter 300 stores in the coming weeks leaving the chain with 500 stores operating nationwide. Ergen said the remaining locations offer “pretty premium” retail opportunities with attractive lease rates.

“There’s a real asset there as long as we can tread water long enough to use them for wireless or other products,” he said without elaborating what those products might be. “Or if not, we re-evaluate and say ‘if we’re actually going to lose money, it doesn’t make any sense to hold it,’ and we’ll shut it down.”

CFO Robert Olson said the existing Blockbuster stores have met their operational threshold, while non-strategic asset Blockbuster U.K. was put up for bankruptcy in order to monetize its assets.

“It’s something we look at every month,” Olson said.

Meanwhile, Blockbuster reported a fourth-quarter (ended Dec. 31) operating loss of more than $24 million, which included a $21 million charge from the Blockbuster U.K. operations.

For the year, Blockbuster posted an operating loss of $35.3 million on revenue of $1.08 billion compared to net income of $1.1 million on revenue of $975 million in 2011.

Blockbuster ended 2012 operating 800 stores compared to 1,500 stores in 2011.

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