Blockbuster may be up for sale, but any interested buyers will face a growing bill that starts with nearly $40 million that three studios say needs to be paid.
The bankrupt movie rental chain is being sued by three studios — 20th Century Fox, Summit Entertainment and, as of this week, Universal Pictures — demanding immediate payment for DVDs and Blu-ray discs shipped to Blockbuster stores since the company filed for Chapter 11 protection in September and for coin from revenue-sharing deals.
Summit led the wave of lawsuits in January, saying it’s owed $9.5 million. It will argue its case in court next week.
Fox will appear in U.S. Bankruptcy Court in New York at the end of March to seek $24 million in owed revenue-sharing payments from a 2005 agreement. Fox says it fears losing another $7 million from missed payments per rental.
“Blockbuster’s latest actions indicate that there is at least a significant risk, if not a complete certainty, that Blockbuster will not turn over the revenue to (Fox Home Entertainment),” the studio said.
Meanwhile, Universal this week said Blockbuster owes it $6.4 million, which will grow to more than $13 million once additional payments are due over the next several months.
The mounting late slips and new court visits for Blockbuster create a more dire situation for the company looking for a way to stay afloat. When Blockbuster filed for Chapter 11, the company’s toppers said, “Blockbuster essentially would be out of business … without the complete ongoing support of the studios.”
But unless studios see proof they will soon get paid for their movies, Blockbuster’s shelves could soon start looking light on discs. Company is in the midst of shuttering more than 600 of its 3,400 stores.
Dallas-based Blockbuster put itself up for sale on Monday after it failed to reorganize its mounting debt nearing the billion-dollar mark.
Creditors, which include Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Varde Partners, are demanding an opening bid of $290 million through an auction handled by New York’s U.S. Bankruptcy Court.