How the mighty have fallen. Blockbuster’s Q2 numbers are out, and they’re even grimmer than Wall Street expected, with revenue declining 20 percent to $788 million. BB’s net losses also increased to $69 million. Blockbuster’s only positive news, if you want to call it that, is that it was able to receive yet another debt reprieve from its creditors. BB’s massive debt repayment of $42 million, out of a total debt burden of nearly $1 billion, is now due at the end of September.
Fast becoming a master of spin without peer, BB CEO Jim Keyes offered the following on the latest forbearance agreement:
“While making progress, this extension allows additional time to complete these complex, multiparty negotiations . . . To take advantage of its unique multi-channel model and revitalize its global brand, Blockbuster will require an improved capital structure.
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Our objective is to complete a recapitalization as soon as possible so we are better positioned to focus our attention and resources on the strategic opportunities to continue our business transformation.”
Six weeks from now, is Blockbuster going to be in any kind of situation where it will be able to make its debt payment? How many more lifelines will BB be tossed by its creditors?
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Will Chapter 11 be in the cards before the next deadline hits?
(via The Wrap)
Chapter 11? I don’t know about that, with the rate that they are bleeding cash, Chapter 7 is looking more and more likely every day it drags on.
Its cash balance was $64.3 million on July 4, down from $109.9 million in April and $188.7 million in January.
Even if they make the $42 million payment at the end of September, when is the next one due? I can’t see them possibly having the cash for it.
At the rate they are losing cash, about $20 million a month, they won’t have any money left in approximately 3 months and that is without paying any loan payments.
If they fail to gain some type of financing, which I am highly doubtful that they will, then I am sure that the creditors will insist on Chapter 7 in order to try to maintain as much of their equity as possible. The longer they let it go on, the less there will be for them to be able to collect from.
And the next two months are no walk in the park, Sept & Oct are survival mode at best!
Are the investors that delusional that they actually think BB will make good if they just keep postponing the due date?
I just keep waiting for them to go belly up and show the studios that forced that 28 day garbage to see how they got screwed. In the meantime, I’ll stick to Redbox and Netflix.
“While making progress, this extension allows additional time to complete these complex, multiparty negotiations . . . To take advantage of its unique multi-channel model and revitalize its global brand, Blockbuster will require an improved capital structure. Our objective is to complete a recapitalization as soon as possible so we are better positioned to focus our attention and resources on the strategic opportunities to continue our business transformation.”
Wow….gotta be the worst case of techno-business-babble ever. Translation to English: “We’re broke, bleeding red ink and our business plan is a joke. Abandon ship if you’re still able.”
inevitable to say the least
i just wish they would let us know on their website or some type of update online when a local store is closing to take advantage of the liquidation deals
was at one that was closing down and i cleaned up
it was upsetting before i got the chance to do the same at another local spot it was completely empty and closed for good : (
You know, you should really just rename this blog to “We hate BlockBuster”…
It may be too little too late, but BB just did the one thing I’ve been suggesting they do forever to their by mail service… they finally leveraged their game inventory in it! I’m actually trying to convince my wife to subscribe right now, but we just bought a new house w/out selling the old first, so cash is a bit tight :(
The only people I feel bad about are the really nice workers @ my local blockbuster. I am thinking they will be out of work by years end.
The only reason I’ve used BlockBuster is for the in-store unlimited game rental passes. $20 a month for one game out at a time, it’s a little more than gamefly but at least I always get new releases the day they come out. But even going in for that every few weeks, I haven’t actually rented a movie there in years, way too expensive.
I’m utterly pissed at Blockbuster. I had their in-store pass. Which means you can rent, two games, or movies at a time as many times as you like throughout the day/month. Now they claimed you can rent movies or games as long as you like without late fees, etc. Well I had one movie for a little over a month and they canceled my pass and claimed they couldn’t charge my bank account card. BULLS***! Because every date the guy gave me that claimed they “tried” to take the money out, I def HAD the money in my account. Plus my bank will take the money out no matter what I have and if I go over and I will get charged an overdraft fee… so no matter what if BB tried to get the money, they would have had it. It shows nothing on my account, not even them attempting. So I believe they’re lying.
Then the Guy says to me, you can keep those movies because they already charged you for them. So that shocked me. So I was like, how can I reactive my account. He scanned my BB card and said for 37.44 I can get the account re-activated. That’s the only reason I paid almost 40 dollars.
Then to make things worse the only reason I paid 40 dollars was because my account was canceled and every time I asked the guy, which was SEVERAL times. If I pay this 40 dollars does this re-activate my account and i can start renting again today? “Yes, you can he said” every time!
I go and get two things and come out to check out and then he tells me. “that will be 16.03 please.” My face was so red with rage. I said wait a minute, I just paid for the pass. Then with a smug attitude he tells me no, you paid for the movies. I looked at him and said “what? You just told me I was already charged for the movies and I ask to reactive the pass and you said this would do it.”
Then he wants to tell me he cannot do anything this late.
I’m pissed because they should have never canceled me; and without a warning or a call? I mean what place is going to keep trying to get money from you’re card, and it keeps failing (or so they claim) and they don’t call you, or email you, or anything?
Please! That seems way shady to me. I will be going to the bank in the morning and have then pull up on their account, to see if BB really tried to take the money out.
Then on top of that I said, I have the movies right here so why won’t you take them back and let me get the pass. He said you’ll have to pay an additional 20 dollar late fee if we do that…. why? He then claimed there might have been a glitch in their system, but why is that my fault? The whole reason for me getting the effing pass was so that I would NOT be charged late fee. They’re making me really mad and I will get the bottom of this one way or another!
If they’re going to be doing this to people who is going to want any service with them? If you’re only going to get screwed over, is it worth you’re time and hard-earned money? Why should I get the sh** end of the stick for a glitch on their behave, if was even a glitch or just a way for them to scam people out of movie.
Ahhh, feel better?
And people wonder why BB is going out of business. It’s renters like this who have totally sucked all revenue out of this company. When BB ended their late fees, all kinds of losers like this kept new releases out for weeks at a time. Then after the movies would sell to their accounts (when their credit cards were good), they only had to reverse the charge and pay something like $1.50 restocking fee. How does a company ever make up that revenue? That was the stupidest decision EVER and the beginning of their downfall.
Hey, missy, you can’t keep the games and movies FOREVER just because you pay for a monthly pass. And, at first you state that you kept “one little movie” then proceed to state “movies” – so which is it? I can’t think of one movie costing $37.44.
Sounds like they were correct, except the associate didn’t explain it to you correctly. If you purchased a MONTHLY pass and keep the games/movies past your pass expiration date, those items will automatically sell to your account. That is why you ended up owning the product.
Your rental account was on hold because you OWED $37.44 for your movie/movies. This has nothing to do with your montly pass. He was absolutely correct in telling you that if you paid that money, you could rent movies again. You would have to pay an additional fee for your monthly pass.
Also, the attempts to get payment through your credit card/bank are computerized and not done in the stores. If your account was up to date, you would have received at least FOUR phone calls along with written notices before anything is sold to your account.
You, little girl, are an idiot. Try following the rules and you won’t end up learning a very expensive lesson.
P.S. And, you should have paid only the $20 late fee and returned the movies, then purchased your next pass.
P.S.S. No, I don’t work for BB but used to before they cut their own throats – the powers-that-be killed that company from Netflix-terrors. They should never have ended the late fee charges but should have extended the rental/due dates. They also screwed themselves on studio agreements for fewer new release copies and were expanding with new stores too quickly. Despite technological advances in movie renting, there is a market for stores like BB. And I don’t care what anybody says, plenty of people still like the store experience.