Struggling home video rental giant Blockbuster is planning to file for Chapter 11 bankruptcy protection this September, the LA Times is reporting, citing anonymous sources:
Executives from Blockbuster and its senior debt holders last week held
meetings with the six major movie studios to discuss their intention to
enter a “pre-planned” bankruptcy in mid-September, said several people
familiar with the situation who requested anonymity due to the
sensitivity of ongoing talks.
The Dallas-based company has been closing stores as more consumers
switch to online rental services and kiosks. Blockbuster lost $435
million in the fourth quarter.
It’s faced heavy competition from upstart kiosk service Redbox, and from Netflix. The latter service, with 15 million subscribers, has been raising eyebrows in Hollywood with major rights deals.
It became a player for pay TV movie rights through its output deal with Ryan Kavanaugh’s Relativity (another company that is shaking up the status quo). It struck an off-network TV deal with Warner Bros. for series that were a tough sell to mainstream basic cablers and local TV stations but perfect for the Netflix aficionado crowd. And it swooped in to offer desperately needed distribution and licensing fees for the partners in fledgling pay TV venture Epix (Paramount, Lionsgate and MGM) in a way that makes Netflix akin to a cable or satellite operator.