Blockbuster May Buy Movielink -- WSJ

The Wall Street Journal reports Blockbuster is in "advanced talks" to buy Movielink for an amount not to exceed $50 million in cash and stock, according to people familiar with the matter. Despite the small size of the deal, it is significant because it will allow Blockbuster to offer a "triple play" of rental services: in-store, online mail order and download. Blockbuster management is said to have acknowledged acquiring a download platform such as Movielink's is cheaper and less risky than developing its own. Movielink is owned by several major movie studios (inc. MGM, Paramount, Sony, Universal and Warner Bros.) as a joint-venture and was launched in 2002, but has struggled to attract customers due to a lack of marketing and a somewhat premature arrival to market. Blockbuster's chief rival Netflix, which has three times the number of online subscribers (6 million vs. 2m), introduced its download service in January.

Sources: The Wall Street Journal
Commentary: Carl Icahn Makes Waves at Blockbuster • Blockbuster Q4 2006 Earnings Call Transcript • Blockbuster Surprises Investors With 2 Million Online Subscribers
Stocks/ETFs to watch: Blockbuster (BBI). Competitors: Netflix (NFLX), Apple (AAPL), Wal-Mart (WMT), Hastings Entertainment (HAST), Movie Gallery (MOVI)

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