Dish Network Corp. offers from Carl Icahn and other investors to win an auction for bankrupt Blockbuster Inc.’s movie-rental business with a bid of $320 million. The deal will now require approval from U.S. Bankruptcy Judge Burton Lifland. The deal will help Blockbuster, once the world’s largest movie-rental chain, to reorganize itself instead of being sold off by liquidators. Dish is likely to pay approximately $228 million in cash to acquire the company.
Blockbuster filed for bankruptcy in September. The company said that the sales at its 5,600 stores, including 3,300 in the U.S., went down in recent years while Netflix Inc. made superb profit by renting movies online and through the mail. “While Blockbuster’s business faces significant challenges, we look forward to working with its employees to re- establish Blockbuster’s brand as a leader in video entertainment,” Tom Cullen, a Dish Network executive vice president, said today in a statement.
A person who was present during the bidding said that Dish Network’s satellite TV provider’s winning bid came shortly after 3 a.m. New York time. The Colorado-based Dish Network won after an eight-hour auction in Manhattan bankruptcy court was transferred to the offices of Icahn’s law firm, Cadwalader, Wickersham & Taft LLP, at 5:30 p.m.
In its Chapter 11 bankruptcy petition, Blockbuster listed its assets of $1.02 billion and debt of $1.47 billion. Blockbuster has 2,400 U.S. stores as of this week and the company is planning to close 700 stores by mid-April. Icahn was once director of Blockbuster and he was teamed with four corporate liquidators: Great American Group Inc., Tiger Capital Group LLC, Hudson Capital Partners LLC and SB Capital Group LLC.
