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While battling for its existence against external competitors such as Redbox and Netflix, rental giant Blockbuster is also dealing with an internal power struggle, and it’s taking place at the highest level. Greg Meyer, the founder of kiosk company DVDXpress (which was eventually acquired by Redbox parent Coinstar), is waging a proxy war to attain a place on BB’s board of directors. The spot Meyer craves belongs to incumbent James Crystal, and Blockbuster leadership is not pleased with the situation.

Blockbuster CEO Jim Keyes, who vehemently opposes Meyer’s nomination, recently put out a press release stating the following:

“While we have an appreciation for Mr. Gregory Meyer’s investment and interest in the company, those are not sufficient reasons for his candidacy for the board.  We are disappointed Mr. Meyer is pursuing a costly and disruptive proxy contest.  A proxy contest can only serve as a distraction to the company when attention and resources would be better used in creating value for stakeholders by implementing our strategic plan.  We assure all of our constituencies that we remain committed, as always, to doing what is right for our shareholders, debt holders, employees, and customers,”

Why would Meyer, who has purchased more than 600,000 Blockbuster shares over the past year, want to secure a spot on the bridge of a sinking ship? Davis Freeberg recently interviewed Meyer to ask him just that, among other things. The entire interview is worth a read, but here are some highlights:

Meyer on why he is interested in joining the BB board during these dark times for the company

“I think the pendulum has swung too far and believe there is an enormous amount of intrinsic value within Blockbuster that can be realized with proper guidance and forward-thinking strategic insight. Love ‘em or hate ‘em, everyone knows that Blockbuster means movies, and having such widespread brand awareness is extremely valuable.”

Meyer on what he would like to see BB’s board accomplish to resolve the company’s current financial crisis

“The Company and its legal and financial advisors need to be thinking about creative solutions to bring the company back to health and not take the easy way out by converting sub debt to equity unnecessarily. My impression is that the Company and its advisors are looking at this as a zero sum game instead of trying to figure out how to creatively increase the size of the pie for all constituents, which I think is doable. That’s why I think it’s so important to have at least one shareholder advocate on the board.”

Meyer on what might help save Blockbuster

“In addition to huge brand awareness, the Company has very strong relationships with the Hollywood studios. These studio relationships have become more apparent in the last few months with the Warner, Fox, and Sony supply deals providing Blockbuster with day-and-date availability of new release titles vs. the 28-day delay for other channels. This is a huge advantage relative to Netflix and kiosk competitors, and it’s one that Blockbuster has never had in the past . . . The studios are smart- they realize it is in their best interest to have a healthy Blockbuster. Blockbuster spends more money on DVD inventory each year than Netflix and the kiosk operators combined, so they’re a very important source of revenue for the studios.”

Meyer on what BB can do to become more relevant to its customers

“Look at the smart things that smaller brick-and-mortar video competitors like Family Video (rental) and MovieStop (retail) are doing. These companies have been growing rapidly over the past several years as they’ve figured out how to remain relevant with consumers despite growing competition from Netflix and the kiosk operators. These companies offer a variety of real services to their customers . . . Additionally, these chains have figured out intelligent pricing structures that appeal to the widest possible audience in a manner that still generates profits for the retailer. There is a lot that can be done with pricing to improve both customer satisfaction and profitability.”

(via Davis Freeberg)

11 Responses to “Power Struggle Taking Place Among Blockbuster Leadership”

  1. Visitor [Join Now]
    Firstlawofnature [visitor]

    I’m getting deja vu. Isn’t this like the 2nd or 3rd time an ex-video guy bought a small stake in a near bankrupt video company and demanded change? More power to him but the iceberg has already shredded the hull. Time for a lifeboat.

  2. Member [Join Now]
    MovieWatcherSupreme [moviewatchersupreme]

    It seems to me that no matter what anybody does, they can not avoid this decline. It is like; they have 4 holes in their boat, and even now they only have enough supplies to fix 3, no matter what they do – they are doomed.

    The Good News: Crashing companies usually have excellent deals and sales before they go completely kaput.

  3. Member [Join Now]

    BBI needs to focus on expanding its kiosks and mail order videos. They also need to lower their prices. The brick and mortar business is a thing of the past.

  4. Visitor [Join Now]
    Ben Dover [visitor]

    I would recommend that Blockbuster start selling porno. That’s their only way out of the current situation.

  5. Visitor [Join Now]
    debra [visitor]

    I think they should be more competitive in the new video rentals at stores…Redbox is way ahead in that market and BB is trying to rent old movies for a 1 there not even close to redbox yet..That is the future…so name or not they better get it together…

  6. Visitor [Join Now]
    Nomo Blockbuster [visitor]

    I don’t know who is more foolish: Mr. Meyer for wanting to be on the board or Mr. Keyes for refusing to listen to both reason and an important stockholder.

    Earth to Mr. Keyes, it is the shareholders that are giving you that inflated paycheck you receive so you best listen to them for once because they may actually know something, unlike you.