Blockbuster:$1 Billion Hostile Takeover of Hollywood Video.

Discussion in 'DVD Video' started by One-Shot Scot, Dec 29, 2004.

  1. 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.asp?articleID=9496&catType=NEWS
     
    One-Shot Scot, Dec 29, 2004
    #1
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  2. One-Shot Scot

    Justin Guest

    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, Dec 29, 2004
    #2
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  3. One-Shot Scot

    Tarkus Guest

    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, Dec 29, 2004
    #3
  4. One-Shot Scot

    stankley Guest

    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, Dec 29, 2004
    #4
  5. One-Shot Scot

    stankley Guest

    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, Dec 29, 2004
    #5
  6. One-Shot Scot

    Stan Brown Guest

    "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, Dec 29, 2004
    #6
  7. One-Shot Scot

    Tarkus Guest

    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, Dec 29, 2004
    #7
  8. One-Shot Scot

    Justin Guest

    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, Dec 29, 2004
    #8
  9. One-Shot Scot

    Justin Guest

    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, Dec 29, 2004
    #9
  10. One-Shot Scot

    Tarkus Guest

    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, Dec 29, 2004
    #10
  11. Stan Brown <> wrote:

    > "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.


    Exactly. Consolidation is the typical response of industries that are
    undergoing a contraction in their markets or profit margins.
     
    Neill Massello, Dec 29, 2004
    #11
  12. One-Shot Scot

    Justin Guest

    Tarkus wrote on [Wed, 29 Dec 2004 11:10:20 -0800]:
    > 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.
    >


    Well, there's 3 Movie Gallerys here and not a single Hollywood Video.
     
    Justin, Dec 29, 2004
    #12
  13. One-Shot Scot

    Tarkus Guest

    On 12/29/2004 11:40:39 AM, Justin wrote:

    > Well, there's 3 Movie Gallerys here and not a single Hollywood Video.


    Fair enough, but I'd be willing to bet that HV is far bigger nationwide.
    And even if it's not, it's not relevant. The purpose of the Monopolies
    Commission is to keep a single company from becoming too powerful by
    securing an overwhelming share of the marketplace. Blockbuster buying HV
    falls under that definition, regardless of whether or not HV is larger
    than MG.
    --
    "The thing about a shark, it's got lifeless eyes, black eyes, like a
    doll's eyes. When it comes at you it doesn't seem to be livin'... until
    he bites you, and those black eyes roll over white."
     
    Tarkus, Dec 29, 2004
    #13
  14. One-Shot Scot

    Larry Guest

    In article <>, says...
    > 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.
    >


    I know that for myself, if Blockbuster buys out Hollywood video, I'll no
    longer be renting DvDs.

    I'll simply buy them.

    Blockbusters miserable business practices are what has kept them down, not
    competition from netflix.

    Here in my area there is exactly 1 choice for video rental, Blockbuster &
    Hollywood video.

    I havent been inside a Blockbuster store since HOLLYWOOD VIDEO opened its
    doors with predominantly "WideScreen" versions of all the realeases it gets,
    and a good selection of "catalog" titles as well as some Anime and foriegn
    films.

    I will not contribute ONE SINGLE PENNY to the coffers of Blockbuster, EVER!


    --
    Larry Lynch
    Mystic, Ct.
     
    Larry, Dec 29, 2004
    #14
  15. One-Shot Scot

    Tarkus Guest

    On 12/29/2004 1:14:57 PM, Larry wrote:

    > Here in my area there is exactly 1 choice for video rental, Blockbuster
    > & Hollywood video.


    Isn't that 2 choices (at least for now)?
    --
    "Zed's dead, baby. Zed's dead."
     
    Tarkus, Dec 29, 2004
    #15
  16. One-Shot Scot

    Larry Guest

    In article <1nqqlg6et4v7m$9.com>,
    says...
    > On 12/29/2004 1:14:57 PM, Larry wrote:
    >
    > > Here in my area there is exactly 1 choice for video rental, Blockbuster
    > > & Hollywood video.

    >
    > Isn't that 2 choices (at least for now)?
    >


    No its only ONE choice, there is no reason whatsoever to consider my local
    Blockbuster as a place to rent videos.

    Still, to this day, if a release is offered in both 4:3 and OAR Blockbuster
    will overwhelm the shelves with 4:3 and MAYBE 6 out of a hundred discs will
    be OAR.

    When asked about it the manager says "nobody much likes the black bars".

    No NC17
    No "Unrated"
    Very poor selection of catalog titles

    That kinda makes for only ONE choice.

    It may well be that not all Blockbuster franchises are like the one local to
    me, but it isnt really a place for someone who loves movies to go and rent a
    title.


    --
    Larry Lynch
    Mystic, Ct.
     
    Larry, Dec 29, 2004
    #16
  17. One-Shot Scot

    luminos Guest

    "Justin" <> wrote in message
    news:2go.com...
    > 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.


    Never heard of it out west.
     
    luminos, Dec 29, 2004
    #17
  18. One-Shot Scot

    Invid Fan Guest

    In article <2go.com>, Justin
    <> wrote:

    > Tarkus wrote on [Wed, 29 Dec 2004 11:10:20 -0800]:
    > > On 12/29/2004 10:42:36 AM, Justin wrote:
    > >


    > >> 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.
    > >

    >
    > Well, there's 3 Movie Gallerys here and not a single Hollywood Video.


    They're probably a small chain that's expanding a bit. Locally the guy
    who founded the first big Buffalo video chain (Video Factory) has
    started up a new one called DotDVD. Under a half dozen stores at the
    moment, and apart from that it's just BB and Hollywood Video.

    --
    Chris Mack "Refugee, total shit. That's how I've always seen us.
    'Invid Fan' Not a help, you'll admit, to agreement between us."
    -'Deal/No Deal', CHESS
     
    Invid Fan, Dec 29, 2004
    #18
  19. One-Shot Scot

    Justin Guest

    luminos wrote on [Wed, 29 Dec 2004 14:22:45 -0800]:
    >
    > "Justin" <> wrote in message
    > news:2go.com...
    >> 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.

    >
    > Never heard of it out west.


    Define West.

    I have seen Movie Gallery as far west as Western Montana.

    Today Movie Gallery is the second largest video specialty retailer in
    the United States with over 2000 stores, and is the proud employer of
    over 16,000 associates. Given the quality of our associates and the
    loyalty of our customers, the future is very bright for Movie Gallery.
    Every day we get closer to making our mission statement a reality:

    http://www.moviegallery.com/base.cg...ookie=1&sess=170e54d35b3bca81b57fc688225f4f6d
     
    Justin, Dec 30, 2004
    #19
  20. One-Shot Scot

    Justin Guest

    Invid Fan wrote on [Wed, 29 Dec 2004 17:44:03 -0500]:
    > In article <2go.com>, Justin
    > <> wrote:
    >
    >> Tarkus wrote on [Wed, 29 Dec 2004 11:10:20 -0800]:
    >> > On 12/29/2004 10:42:36 AM, Justin wrote:
    >> >

    >
    >> >> 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.
    >> >

    >>
    >> Well, there's 3 Movie Gallerys here and not a single Hollywood Video.

    >
    > They're probably a small chain that's expanding a bit. Locally the guy
    > who founded the first big Buffalo video chain (Video Factory) has
    > started up a new one called DotDVD. Under a half dozen stores at the
    > moment, and apart from that it's just BB and Hollywood Video.


    They claim over 2000 stores. Just as many as HV claims.

    BB claims 8500 stores worldwide, maybe 4500 in the US.
     
    Justin, Dec 30, 2004
    #20
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