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Report: Dish Readying Blockbuster Streaming Service

6 Sep, 2011 By: Erik Gruenwedel

New subscription service planned for next month could include movies from Starz Entertainment, which just ended license talks with Netflix

Dish Network Corp. reportedly is readying a Blockbuster-branded subscription streaming service for launch in October that would include movies from cable aggregator Starz Entertainment.

Bloomberg, citing a person familiar with the deal, said the SVOD service would augment Blockbuster’s transactional VOD platform and 1,500 Blockbuster stores and by-mail subscription service. It would also include movies from Starz Entertainment, which just ended license renegotiations with Netflix.

A representative from Dish/Blockbuster LLC declined to comment.

The satellite TV operator, which in April acquired Blockbuster in an auction sale, has made no secret its desire to take on Netflix. New CEO Joe Clayton last month told the Los Angeles Times he didn’t believe Netflix would corner the burgeoning SVOD market.

“If I were them, I'd be watching what's going on,” Clayton told the Times.

Clayton, who previously headed Sirius Satellite Radio and was instrumental with its merger with XM Satellite Radio, confirmed Dish would maintain a Blockbuster store-based business model with ancillary business opportunities tied to Dish’s satellite TV platform.

Indeed, new Dish subscribers automatically receive a 90-day store membership to Blockbuster. In addition, Blockbuster On Demand transactional VOD titles are available on street date through Dish and online.

Dish has aggressively acquired about $3 billion worth of wireless spectrum, which analysts say the company could evolve into a proprietary 4G network.

Frost & Sullivan analyst Dan Rayburn in August said he wasn’t surprised by Clayton’s remarks, considering Dish bought Blockbuster for more than its 1,500 stores.

“What exactly they will do with it and what their service will look like, that’s the question,” Rayburn said. “I think they could compete, but [it's] too early to say until we know what they offer.”

Regardless, the new scuttlebutt raises the stakes for the No. 2 satellite TV operator behind DirecTV, according to analyst Ryan Vineyard with RBC Capital Markets in New York.

“It goes from being an old-school pay-TV company to launching what could be a really high-growth business,” Vineyard told Bloomberg. “This ought to begin changing the way investors think about Dish.”

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