Icahn, Liquidator Top Blockbuster Bidding After Day 25 Apr, 2011 By: Erik Gruenwedel
Great American Corp. participation portends possible store shutterings
Blockbuster’s much-watched auction sale April 5 ended a second day in New York with activist investor Carl Icahn spearheading a leading $310.6 million bid, which includes liquidator Great American Corp.
The day started with five bidders, including South Korean teleco SK Telecom, Dish Network, Cobalt Video Group, which submitted the initial $290 million bid (now upped to $308.1 million), Icahn and liquidators Gordon Brothers and Hilco Merchant Resources. The liquidators subsequently withdrew their bids.
SK Telecom’s bid of $284.5 million, which was rejected by Blockbuster as inadequate, was the only one that would have maintained much of Blockbuster’s current operations, according to media reports. Scuttlebutt suggests the liquidators would shutter most of the existing 1,700 Blockbuster stores, sell off inventories and license intellectual property rights to third parties.
Dish, which reportedly bid $307.1 million, is believed to be interested in leveraging Blockbuster's platforms for digital and physical movie distribution.
Great American is no stranger to entertainment retail, having participated in the liquidations of Tower Records, Circuit City, Movie Gallery and Hollywood Video, among others. It's association with Icahn suggests that should the inverstor win the auction, Blockbuster stores most likely would become his first victims.
Separately, Blockbuster said it wouldn’t file an annual 10K report, as required by the Securities and Exchange Commission. The company, in a regulatory filing, said attrition of personnel and diversion of limited resources toward preparing for the public sale contributed to the non-filing.
Blockbuster also said it has a requested filing a modified annual report.
According to Bruce Lewis, SVP and controller of Blockbuster, the company actually cut its fiscal year 2010 net loss 53% to $265 million from a net loss of $560 million in fiscal 2009.
Revenue dropped $830 million (20%) to $3.2 billion from $4.1 billion due primarily to declining same-store sales, reduction in overall store count and weakening of its Blockbuster by Mail subscriber base. The company also reported an $18 million tax gain from discontinued operations in Argentina and Ireland, and a $17 million decline in interest expense, among other expense reductions.
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