Blockbuster in deal with studios; shares jump
DALLAS (AP) – Blockbuster Inc. has reached new terms with Twentieth Century Fox and Sony Corp.'s movie studios that will give the struggling DVD rental company quicker access to new films and better financial terms.
The deal sent Blockbuster shares soaring ahead of regular trading Wednesday, though its stock is still well below the $1 mark. It rose 6.9 cents, or 27 percent, to 32 cents.
The move comes as Blockbuster tries to convince its creditors to renegotiate the terms of its debt in order to avoid a bankruptcy filing.
The company said late Tuesday that Twentieth Century Fox, owned by News Corp., and Sony Pictures Home Entertainment will deliver new films for its traditional stores and by-mail service on the same day they are released for sale at retail outlets. It already has a similar deal with Time Warner Inc.'s Warner Home Video.
Blockbuster is also getting "enhanced payment terms" – presumably cheaper prices on new films – from the studios in return for a first lien on the assets of Blockbuster Canada, meaning the studios will have first priority on those assets in case of a Chapter 11 filing.
Blockbuster has been struggling with competition from Netflix Inc., which has pioneered delivering films by mail and over the Internet, and Redbox, with its $1-per-night rental kiosks.
It also announced Tuesday that it has a plan to cut operating costs by $200 million this year, though the company did not say how it will meet that goal.