By Bill Zeeble, KERA News
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-891355.mp3
Dallas, TX – Struggling video rental giant Blockbuster, headquartered here in Dallas, is close to bankruptcy. KERA's Bill Zeeble has more.
Blockbuster opened its first store in Dallas 25 years ago. By the beginning of this decade, it had some 5 thousand brick and mortar stores. But then Netflix hammered Blockbuster with online movie ordering. Michael Pachter, an analyst with Wedbush Securities, says Redbox vending machines also appeared. They dispense low-cost, popular films.
Pachter: We've seen Redbox literally go from 3,000 boxes 3 or 4 years ago to 20,000 boxes at the end of 09. So you're going to pass 6 Redboxes before you get to a Blockbuster. At a lower price.
Pachter believes Blockbuster is now so loaded with more than 700 million dollars in debt that it cannot survive
Pachter: The future of Blockbuster is they're gone. The public won't support a 5,000 square feet store with 4 employees. When the competitor is a dumb box sitting outside a Wal-mart or Albertsons , it's a lot easier to go to.
Dallas analyst David Johnson says whether the company files for chapter 11 bankruptcy or not there's still a value to Blockbuster.
Johnson: Blockbuster is a well-known name. Here and worldwide. 112 There's likely money out there to buy or resurrect an important and arguably an iconic name.
KERA tried repeatedly to reach Blockbuster, who didn't return calls. But financial papers filed this week, Blockbuster said between last year's losses, cash flow problems, and increasing competition, there's, quote, substantial doubt it can continue as a going concern. It's stock price dropped Wednesday to 27 cents a share.