DISH Network Offers $320 Million For Blockbuster

DISH Network was the high bidder to take over Blockbuster, the video rental business that filed for bankruptcy last September. The satellite TV provider said it will pay around $320 million for Blockbuster. The deal has a lot of people scratching their heads and asking: Why?

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RENEE MONTAGNE, host:

Now to the next step for Blockbuster. The bankrupt video rental company is about to be taken over by the satellite TV company DISH Network. DISH was the highest bidder at auction, and will pay $320 million.

As NPR's Tamara Keith reports, the deal has a lot of people scratching their heads.

TAMARA KEITH: There was a time when Blockbuster was worth $5 billion. But that time is long gone, largely because the company lost out to Redbox and Netflix and wasn't ready for the arrival of streaming video on the Web. The other bidders at the Blockbuster bankruptcy auction were planning to liquidate - sell off the DVDs on the store shelves - but not DISH Network.

Mr. TODD RETHEMEIR (Analyst, Hudson Square Research): It's an interesting move.

KEITH: Todd Rethemeier is an analyst with Hudson Square Research who follows Dish Network.

Mr. RETHEMEIR: It gives them a lot of options, and they're not spending very much on it. For a company the size of DISH, you know, a couple hundred million here isn't really that big of a deal.

KEITH: Rethemeier says the Blockbuster name is worth something. And the company does have contracts with a few movie studios to stream films on the Web. DISH issued a statement saying Blockbuster will, quote, "complement our existing video offerings and present cross-marketing opportunities."

Douglas McIntyre isn't so sure. He's editor of 24/7 Wall Street.

Mr. DOUG MCINTYRE (Editor, 24/7 Wall Street): The patient is dead on the table, but there's one doctor in the room who refuses to give up on him.

KEITH: McIntyre says there's an adage in investment banking: cheap gets expensive. And he suspects that may be what happens in this case.

Tamara Keith, NPR News, Washington.

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