Blockbuster:$1 Billion Hostile Takeover of Hollywood Video.

Blockbuster has finally admitted that its walk-in stores are rapidly
losing customers to online companies. Many educated DVD customers
are going elsewhere to find low cost DVDs, low cost DVD rentals, a
large, diversified selection and, most importantly, no late charges.

With this in mind, why does Blockbuster want to acquire even more
high-overhead walk-in stores by making a high-pressure power play to
acquire Hollywood Video?

*** *** ***

DEC. 28 | In a bid to force Hollywood Entertainment to negotiate,
Blockbuster said Tuesday it would initiate in mid-January a $1 billion
hostile takeover of its rental rival if that company's board refuses to
cooperate.

Blockbuster said it would offer Hollywood shareholders $11.50 per share
in cash and would consider a higher price if Hollywood's board of
directors cooperates and opens its books allowing Blockbuster to do due
diligence. Blockbuster also would assume $300 million in Hollywood debt
under the proposal.

The offer is the same one it made for the chain in November.

"We have a price that we can get to on our own," Blockbuster general
counsel Ed Stead said. "If they think the company is worth more, they
need to engage in some dialog with us and cooperate."

Hollywood's shares were trading up slightly at $13.15 in midday activity
on the Blockbuster announcement. Blockbuster's stock edged down 1% to
trade at $9.30.

Blockbuster is betting that Hollywood shareholders wanting a higher
price will pressure the company's board to cooperate.

"It's really up to their board to decide whether they want to cooperate
or not and I would hope that they come to the right conclusion," Stead
said.

The threat of a hostile takeover by Blockbuster was somewhat expected.

Earlier this month, Blockbuster said Hollywood had informed the company
it would open its books only if Blockbuster agreed to not launch a
hostile takeover for three years. Tellingly, as it turns out,
Blockbuster refused.

"This is a game of chicken," observed analyst Dennis McAlpine of the
market research firm McAlpine and Associates. "Each one is waiting to
see who will turn first."

Blockbuster's bid tops an agreement between Hollywood and a partnership
of Los Angeles investment firm Leonard Green Partners and Hollywood CEO
Mark Wattles to buy the rental chain for $10.25 a share. The partnership
initially had offered to buy the company for $14 a share but dropped the
bid citing "changes in industry and market conditions" and after
reviewing Hollywood's books.

"That's gotta make you wonder what's in there," McAlpine said.

Hollywood did not return calls for comment and was quiet following
Blockbuster's announcement.

Blockbuster has said that the acquisition of Hollywood would allow it to
better serve customers. By acquiring Hollywood, the chain could use
Hollywood stores as additional points of distribution for an integrated
online and in-store rental service, Stead said.

Blockbuster has already begun talks with the Federal Trade Commission
and believes it can win regulatory approval because it views its
competitors not as other rental chains but as mass merchants and digital
cable, Stead said.

"Blockbuster believes that this proposed acquisition is
pro-competitive," Blockbuster chairman and CEO John Antioco said in a
statement. "In recent years, the home entertainment landscape has
broadened considerably. Blockbuster today faces strong competitive
challenges from the aggressive sale of DVDs by mass merchants and online
retailers, as well as increasing penetration by premium cable and
satellite services.

"Additionally, we believe the strength of competition from these and
other emerging sources, such as video-on-demand and computer
downloading, is likely to increase significantly in the future."

Movie Gallery, which made an offer for Hollywood for an undisclosed
price, has talked up its ability to easily win regulatory approval in
its bid.

http://www.videobusiness.com/article...6&catType=NEWS

One-Shot Scot

Tarkus wrote on [Wed, 29 Dec 2004 08:45:18 -0800]:
> On 12/29/2004 8:11:21 AM, One-Shot Scot wrote:
>
>> With this in mind, why does Blockbuster want to acquire even more
>> high-overhead walk-in stores by making a high-pressure power play to
>> acquire Hollywood Video?
>
> Where's the Monopolies Commission?

How would it be a monopoly?

Justin

On 12/29/2004 8:11:21 AM, One-Shot Scot wrote:

> With this in mind, why does Blockbuster want to acquire even more
> high-overhead walk-in stores by making a high-pressure power play to
> acquire Hollywood Video?

Where's the Monopolies Commission?
--
"All this torturing people gets me HOT!"

Tarkus

How would it not? Today there are 2 high-street video stores in the
US. Unless I'm very much mistaken, 2-1=1, and 1=monopoly. I think
the math is pretty simple here!

stankley

How would it not? Today there are 2 high-street video stores in the
US. Unless I'm very much mistaken, 2-1=1, and 1=monopoly. I think
the math is pretty simple here!

stankley

"One-Shot Scot" wrote in alt.video.dvd:
>With this in mind, why does Blockbuster want to acquire even more
>high-overhead walk-in stores by making a high-pressure power play to
>acquire Hollywood Video?

Because it will close one store or the other in every location where
they compete, thus (it assumes) making its failing stores profitable.

--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com/
"Don't move, or I'll fill you full of [... pause ...] little
yellow bolts of light." -- Farscape, first episode

Stan Brown

On 12/29/2004 8:44:13 AM, Justin wrote:

> Tarkus wrote on [Wed, 29 Dec 2004 08:45:18 -0800]:
>> On 12/29/2004 8:11:21 AM, One-Shot Scot wrote:
>>
>>> With this in mind, why does Blockbuster want to acquire even more
>>> high-overhead walk-in stores by making a high-pressure power play to
>>> acquire Hollywood Video?
>>
>> Where's the Monopolies Commission?
>
> How would it be a monopoly?

The same reason Pepsi (or was it Coke?) buying 7-Up was considered a
monopoly. A monopoly doesn't mean there's no competition. It means one
company has an unfair share of the market. See also Microsoft.

Blockbuster is already nearly a monopoly in the B&M rental market. To
acquire their only half-ass competitor would put them way over the top.
--
"As a producer, and being immature, obviously Porky's and Rock 'n'
Roll High School give me the opportunity to bring more stupidity
and childishness to a whole new generation."
- Howard Stern on producing the upcoming remakes of those films

Tarkus

stankley wrote on [29 Dec 2004 08:55:28 -0800]:
> How would it not? Today there are 2 high-street video stores in the
> US. Unless I'm very much mistaken, 2-1=1, and 1=monopoly. I think
> the math is pretty simple here!

Really? That's odd. Movie Gallery is also available. As are hundreds if
not thousands of smaller stores and chains.

Unless by Monopoly you mean more than one.

Justin

Tarkus wrote on [Wed, 29 Dec 2004 09:54:27 -0800]:
> On 12/29/2004 8:44:13 AM, Justin wrote:
>
>> Tarkus wrote on [Wed, 29 Dec 2004 08:45:18 -0800]:
>>> On 12/29/2004 8:11:21 AM, One-Shot Scot wrote:
>>>
>>>> With this in mind, why does Blockbuster want to acquire even more
>>>> high-overhead walk-in stores by making a high-pressure power play to
>>>> acquire Hollywood Video?
>>>
>>> Where's the Monopolies Commission?
>>
>> How would it be a monopoly?
>
> The same reason Pepsi (or was it Coke?) buying 7-Up was considered a
> monopoly. A monopoly doesn't mean there's no competition. It means one
> company has an unfair share of the market. See also Microsoft.
>
> Blockbuster is already nearly a monopoly in the B&M rental market. To
> acquire their only half-ass competitor would put them way over the top.

Oh bull. Movie Gallery is all over the place.

Justin

On 12/29/2004 10:42:36 AM, Justin wrote:

> Tarkus wrote on [Wed, 29 Dec 2004 09:54:27 -0800]:
>> On 12/29/2004 8:44:13 AM, Justin wrote:
>>
>>> Tarkus wrote on [Wed, 29 Dec 2004 08:45:18 -0800]:
>>>> On 12/29/2004 8:11:21 AM, One-Shot Scot wrote:
>>>>
>>>>> With this in mind, why does Blockbuster want to acquire even more
>>>>> high-overhead walk-in stores by making a high-pressure power play to
>>>>> acquire Hollywood Video?
>>>>
>>>> Where's the Monopolies Commission?
>>>
>>> How would it be a monopoly?
>>
>> The same reason Pepsi (or was it Coke?) buying 7-Up was considered a
>> monopoly. A monopoly doesn't mean there's no competition. It means
>> one company has an unfair share of the market. See also Microsoft.
>>
>> Blockbuster is already nearly a monopoly in the B&M rental market.
>> To acquire their only half-ass competitor would put them way over the
>> top.
>
> Oh bull. Movie Gallery is all over the place.

I've never heard of it. I guess not.

I just searched on the internet. There is one store in my Las Vegas area
(called "Video Update," oddly). By contrast, there are dozens of
Blockbuster and Hollywood Video stores.

Again, "monopoly" in the legal sense does NOT mean NO competition.
--
"No one needs to know about this except you, me and Mr. Soon-to-be-
living-the-rest-of-his-short-ass-life-in-agonizing-pain-rapist here."

Tarkus