Blockbuster Inc., the #1 U.S. movie chain, sold its UK game retail unit, Game Station, to British-based Game Group plc for $150 million in cash. The sale is part of the company's effort to divest non-core and foreign assets in order to focus on domestic success. The sale "underscores our intent to focus on our Blockbuster-branded assets in North America in support of our goal to grow our overall share of the video rental market, both in-store and online," CEO John Antioco said. Blockbuster said it intends to use of the bulk of the sale's proceeds to pay down debt -- which stood at $984 million at the end of 2006. During 2006, Blockbuster completed the divestiture of its Movie Trading Co. locations and Movie Brands Inc. subsidiary, left Spain, and sold its Taiwan subsidiary. More recently Blockbuster sold its U.S.-based Rhino Video Games chain and entered into an agreement to sell its Australian subsidiary. Blockbuster shares are up 17.4% in 2007 after gaining 39% in 2006.
Sources: Press release, Reuters
Commentary: Netflix, Blockbuster: Time for the Online Rental Wars? • Blockbuster's Online Focus is Killing its Competitive Advantage • Flixster: Blockbuster/Netflix's Holy Grail?
Stocks/ETFs to watch: Blockbuster Inc. (BBI). Competitors: Netflix Inc. (NFLX), Movie Gallery Inc. (MOVI), GameStop Corp. (GME). ETFs: PowerShares Dyn Leisure & Entertainment ETF (PEJ)
Conference call transcript: Blockbuster Q4 2006
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