Blockbuster's Busy Year Ahead

DALLAS-A lot is going on at Blockbuster Inc., as one analyst remarked during the company’s conference call yesterday reporting its Q4 financial results. The video and game “rentailer” is trying to take over its largest competitor, Hollywood Entertainment, recently eliminated late fees and began offering movie rentals over the Internet.

“One way or another we would like a decision made on the merits of the transaction as soon as possible,” said John Antioco, Blockbuster Chairman and CEO, referring its proposed $1.3 billion, $14.50 a share, acquisition of Hollywood, and its 2,000 stores. Hollywood executives have already agreed to a $13.25 a share bid by competitor Movie Gallery. They have expressed apprehension about a possible Blockbuster takeover due to, among other things, doubts that the Federal Trade Commission would approve such a transaction because of anti-trust concerns. But Antioco revealed yesterday that Blockbuster executives are in talks with the FTC about the deal, and the company should get an opinion from the commission by the end of the month.

The elimination of late fees will cost Blockbuster $250 million to $300 million in operating losses, but executives said that could be partially offset by higher rental volumes. “We made a radical shift in the way we operate,” Antioco said.