Below are some comments from Blockbuster (ticker: BBI) from its May 5, 2005 conference call with investors.
... it would be easier if we .. could just sit back and ride out the rising tide of video rental, throw off ever-growing oodles of free cash flow and not have to invest in the business. But it just ain't so…Viacom realized that you couldn't run Blockbuster for cash…and, remember, the Viacom folks are guys who love free cash flow and have plenty of media experience.
… we looked at taking the company private or selling to a strategic buyer, but with the dynamics of price expectations, the uncertainty surrounding the video rental market and the requirements for a significant return on investment, a deal just didn't come together. In other words, many smart LBO firms came to the same conclusion as Viacom …So while management remains open to an LBO, clearly a better time to contemplate a …would be once we have demonstrated that our plan works…
So after exploring an LBO, we then went on to complete a difficult and complicated split-off from Viacom…. We saw it as a choice between watching our profitability vanish or reinventing, investing and hopefully growing our business and it looks like our efforts are beginning to pay off.
(Quotes are from the CCBN StreetEvents transcript.)