Antioco says it's not too late for 'No Late Fees' to add up by '07
WASHINGTON — Breaking a long, self-imposed silence, Blockbuster chairman-CEO John Antioco said Tuesday that 2006 could bring further retrenchment as the rental giant tries to find its feet after staggering through 2005.
Speaking at Citigroup’s annual Entertainment, Media and Telecommunications conference in Phoenix, Antioco predicted an industrywide decline in the number of videostores this year, including Blockbuster outlets, and hinted that it may look for ways to restore the revenue it lost by eliminating late fees.
“When we modeled No Late Fees we assumed we’d see an uptick in in-store rental activity, and we’ve seen that uptick, but it has not been quite as large as we expected,” he said. “We thought it would be around 8%, and we didn’t quite get there.”
Though Antioco said he still believes eliminating late fees will pay off for the chain by 2007, he added, “Nothing prevents us from reinstating late fees, or taking some price increases, or raising restocking fees. There are a lot of things we could do if we have to, but right now we think we have a competitive advantage.”
That competitive advantage won’t spare Blockbuster from further cutbacks, however.
“Overall, I would expect a 10%-15% decline in store capacity industrywide over the next three years. I don’t think Blockbuster’s rate will be that high, but we will be increasing the net number of stores we close over the next few years,” the Blockbuster chief said.
As for his own fate at the company and his relationship with Carl Icahn, the financier who engineered his ouster from the board last year only to reinstate him, Antioco was circumspect.
“If the question is what Carl will do in this round of board votes, which I think he has to figure out by February, the answer is I wouldn’t speculate,” Antioco said.
Icahn controls two seats on the board after winning a proxy fight against management last April.
Under Blockbuster’s staggered directors’ terms, Icahn could conceivably gain control of the board by running another slate of candidates this year.