Contentinople - Frank Smith - News Bits: Blockbuster Bets on Digital, Again

Written by Frank Smith

Tuesday, April 29. 2008 at 11:55 AM EDT Post a comment

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What do you do when people stop renting movies as much as they used to? If you're Blockbuster Inc. (NYSE: BBI) you make a bid to acquire electronics retailer Circuit City Stores Inc. for more than $1 billion, for one. But it doesn't stop there. Blockbuster is in talks to join the new Viacom Inc. (NYSE: VIA)-led television channel.

According to the Wall Street Journal, the movie rental chain is preparing to join Viacom (which owns Paramount Pictures Corp. ), Metro-Goldwyn-Mayer Inc. , and Lion's Gate in launching a pay-TV channel featuring movies and original TV series from these studios. Blockbuster would get the digital rights to content on the channels in return for its investment.

Blockbuster hasn't had much luck breaking into the digital rental market. Last year the company acquired Movielink, which despite some high-profile deals like premiering Jackass 2.0, burned through $148 million in its first five years of life. Blockbuster bought the company for $6.6 million in August 2007.

Movielink was launched by MGM, Paramount, Sony Corp. (NYSE: SNE), Universal, and Warner Bros. Entertainment Inc. to combat piracy by offering their movies and content online.

The still unnamed Viacom-led channel is aiming for a 2009 launch date.

Elsewhere:

Circuit City's largest investor HBK Investments gave Blockbuster the nod. HBK owns about 9 percent of Circuit City's stock and it is also the third largest shareholder in Blockbuster (with a 8.5 percent stake).

Cox Enterprises is purchasing the advertising network Adify for $300 million. The San Bruno, Calif.-based Adify powers the ad networks for Time Warner Inc. (NYSE: TWX), Comcast Corp. (Nasdaq: CMCSA, CMCSK), Forbes, and Martha Stewart Living Omnimedia. Its investors include GE Commercial Finance, NBC Universal , and Time Warner Investments .

Tags: Acquistions, Advertising, Business, Comcast, Lionsgate, NBC, Sony, Time Warner, Viacom, Warner Brothers

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