Blockbuster: Down but Not Yet Out?

It came as no surprise to many when Blockbuster declared bankruptcy last September, given the struggling chain’s continued losses. After a lackluster holiday season, it appeared all but certain that the company was headed for Chapter 7 and liquidation.

But not so fast! As reported by the Wall Street Journal last week, a judge has decided that a group of hedge funds should be allowed to purchase the company in a bankruptcy auction. One stumbling block was whether or not Hollywood studios would receive enough of the money that is already owed for DVDs purchased by Blockbuster; without it, the studios would not ship any new discs to the company. Until this issue was resolved, the deal was reportedly dead on arrival. Terms were reached, however, and the bid can proceed.

According to the WSJ article, as many as a half dozen other groups may want to bid for Blockbuster, and so the chain may live to see another day. Clearly, Hollywood wants to retain a major customer for its DVDs, since the studios have not yet worked out what to do when DVDs are replaced by online and other electronic delivery methods. No matter who buys Blockbuster, its future remains shaky at best.