Blockbuster minds debt

Rental revenues for third quarter down 1%

Blockbuster reassured investors Thursday that its third-quarter financials would reflect compliance with debt covenants for the period.

Facing a cash crunch, Blockbuster had risked default by not complying with certain provisions in its covenants earlier this year. But the banks allowed the vidtailer to renegotiate terms.

Blockbuster also announced that its domestic rental revenues for the third quarter dipped 1%, outperforming the overall industry, which saw rental revs fall 11.7%, according to Rentrak.

Blockbuster’s figure includes the impact of the no-late-fees policy it instituted early this year. That policy cost the company about $140 million in lost revenue in the second quarter.

Late fees accounted for 13% of Blockbuster’s rental revenue in the third quarter last year.

Blockbuster said it won’t meet its target of 2 million online subs by March, as it had predicted. It will hit that number later in the year.

“In the face of a challenging rental industry, we believe we will continue to outperform the store-based rental industry as a result of the elimination of extended viewing fees, and we see significant growth opportunities in the online rental business that we intend to aggressively pursue,” said chairman-CEO John Antioco.

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