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Dish Upping Blockbuster Store Closures

13 Jan, 2012 By: Erik Gruenwedel

Dish Network is closing more underperforming Blockbuster stores nationwide than originally planned, including converting some locations into satellite TV service centers.

Dish CEO Joe Clayton, who disclosed the changes in an interview with Reuters at the Consumer Electronics Show in Las Vegas, didn’t say how many of Blockbuster’s 1,500 stores would be affected. The closures would occur on a “case by case” basis, added spokesperson Marc Lumpkin.

A Dish spokesperson said Blockbuster stores can close for a number of reasons, such as the store reaching the end of its lease, a location may be too large in size, or property owners may be unwilling to reach a reasonable lease renewal.

“As we have said in previous statements, we remain committed to maintaining only those stores that we believe we will be able to operate profitably,” said the spokesperson. “For employees of any closing stores, we intend to relocate as many employees as possible to other stores.”

Dish acquired Blockbuster for $320 million last April and has spent considerable resources rejuvenating the former bankrupt rental icon, including rebranding the company’s Movie Pass streaming, by-mail and store platform for Dish subscribers to “Blockbuster @Home.”

Clayton has positioned the new Blockbuster as competitive alternative to Netflix and Redbox — a strategy that now could include catering to Dish customers in the form of service centers for set-top boxes and bill payments.

"If a consumer has a problem, just bring your box in and we'll give you a new one so you don't have to stay at home and wait for an installation," Clayton said.

Blockbuster generated $347 million in revenue for Dish in the most recent fiscal period, including generating incremental income of $3 million — the first in years.

The increased store closures could be a boon for Redbox, which has about four kiosks within a five-mile radius of every Blockbuster store, according to Eric Wold, analyst with B. Riley & Co. in Los Angeles. He said Redbox offers a superior disc rental option to the casual consumer than subscription-based Netflix, which just agreed to a 56-day delay on new releases from Warner Home Video.

Wold said the addition of disgruntled Netflix subscribers, last fall’s 20% price increase and pending strong summer theatrical release slate portend a positive Q3/Q4 disc release period for the kiosk vendor.

“Any increase in Blockbuster store closures gives us added comfort with our projections,” he wrote in a Jan. 13 note.

About the Author: Erik Gruenwedel

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