Home Media Magazine - September 16-22, 2007 - (Page 32)

NEWS www.homemediaretailing.com Gallery to Skip Interest Payments By Erik Gruenwedel R E TA I L Financially challenged Movie Gallery last week said missing separate interest payments, due Sept. 10 to holders of its first and second lien credit agreements, will unlikely trigger default proceedings, according to a regulatory filing. The Dothan, Ala.-based No. 2 video service said the previously filed credit forbearance agreements until Sept. 30 with its lenders and bondholders should cover the missed interest payments. Gallery has struggled financially since it outbid No. 1 Blockbuster Inc. in 2005, paying $1.1 billion to acquire then No. 2 Hollywood Entertainment Corp. Regardless of the fine print in the A Family Affair forbearance deals, Wedbush Morgan Securities analyst Michael Pachter said creditors have been trying to determine what the fallout would be from a Gallery bankruptcy. He said that is why Gallery has not declared so far. “The creditors have to seize the company and do the best they can to get repaid,” Pachter said. “This means Gallery cannot continue to lose money.” He questioned what Gallery is doing about its inventory and whether studios are going to advance them new movies without getting paid cash-on-delivery (COD). Pachter said creditors Oct. 1 could compel bankruptcy, and a bankruptcy court will appoint a debtor-inpossession who, on behalf of the creditors, would run the company in their best interests. He said that would result in about 1,000 predominantly Hollywood Video store closures — a feat, Pachter said, more easily accomplished during a bankruptcy. He said such a move would change how Blockbuster operated going forward. “They won’t feel as compelled to shutter stores if there are Hollywood Video stores closing all around them,” he said. To celebrate the Sept. 18 DVD debut of ABC-TV’s Brothers & Sisters: The Complete First Season from Walt Disney Studios Home Entertainment, cast and guests gathered Sept. 18 at the San Antonio Winery in Los Angeles. (L-R): ABC Entertainment’s Bruce Gersh, Lori MacPherson of Walt Disney Studios, Rob Lowe and Gordon Ho of Walt Disney Studios. Photo by: Alex Berliner©Berliner Studio/BEImages Wal-Mart Bars Former Exec Continued from page 1 Blockbuster Remakes Its Executive Lineup direction two years ago, and nothing and logistics. Both held similar po- has happened. sitions at 7-Eleven. “Maybe [Shepherd] wasn’t on Shepherd, who earned a base board with that,” Pachter said. salary of $700,000 plus incentives, “The business has changed.” joined Blockbuster in 1995 as manThe analyst said he knew Shepaging director of the company’s U.K. herd was on the outs after the execbusiness and subsequently served utive jettisoned 38% of his common in several executive posistock (284,320 shares) last tions, including SVP intermonth for more than $1.2 national, chief marketing million. and merchandising officer, In the continuing shakeand president of worldwide up, Blockbuster said it has stores. appointed Thomas Casey to Although lauding Shepthe position of EVP and herd for his major role in CFO, replacing seven-year Casey helping to transform BlockCFO Larry Zine, who also is buster from a video retailer into a retiring at the end of the month. company that provides “completely Casey will oversee Blockbuster’s ficonvenient access” to media enter- nancial, accounting and internal autainment, Keyes’ conciliatory ges- dits. He previously was managing ture to the former COO in his new director for Deutsche Bank Securiendeavors underscored the changes ties Inc., where he served as a stratein store, analysts said. gic advisor to several national retail, “He is bringing in guys he is com- food wholesale and convenience fortable with,” said Michael Pachter, store chains. media analyst with Wedbush Mor“Throughout his more than 20gan Securities in Los Angeles. “Is it year career, Tom has been instruunusual to work with people you are mental in helping some of the comfortable with? I don’t think it is.” world’s largest companies successPachter said that according to talks fully formulate their financial and with senior management, there is a strategic business plans for the fudesire to change the physical size of ture,” Keyes said. individual Blockbuster stores. He Former CFO Zine in June said he said the convenience store model af- would leave Blockbuster at the end fords them the opportunity to carry of the year, when former chairman different video selections in each and CEO John Antioco had schedstore. uled his departure. Antioco ended He said Blockbuster has stated it up leaving early, in July. was going to make changes in this At that time, it was disclosed Zine Continued from page 1 would receive a $200,000 retention bonus, his salary, a separate 2007 bonus and a previously announced lump sum payment of $1.2 million upon his departure, according to regulatory filings. If dismissed prior to Dec. 31, Zine was slated also to receive fully vested shares of all outstanding restricted stock. The former executive sold 225,000 shares of common stock from Aug. 15-17, realizing a gross return of more than $1 million. Pachter said it isn’t rocket science to sell or rent someone a movie as opposed to selling beer. It is still retail. He said Keyes brought in retail guys who understand retail. On the flip side, Pachter said the new executives have no direct experience in the movie rental business. “[It’s unclear] how they respond to online competition, which Antioco and Co. lived through; Keyes and Co. have only read about it in the newspaper,” he said. Independent media analyst Dennis McAlpine said Keyes believes his new hires are on the same page and understand better than the old guard the need for faster changes in running the business. Whether they make the right decisions is another matter. “Therein lies a conundrum that has bothered businesses for years,” McAlpine said. “Which is better: To have experience in the business or to have business experience? Obviously, [Keyes] believes in the latter.” the associate’s separation … if a conflict of interest exists between the associate’s former position at WalMart and the associate’s new position with a supplier.” Despite DreamWorks’ titles being distributed by Paramount Home Entertainment, Porter will be subject to Wal-Mart’s policy, Clark said. “The Global Ethics Office reviews the inquiry and determines whether a conflict exists when a former associate proposes to go, or has gone, to work for a supplier,” she added. DreamWorks Animation representatives could not be reached by press time. But spokesman Rich Sullivan told the Los Angeles Times that Porter will primarily be working on digital delivery and portable me- dia avenues for the studio. Wal-Mart has not yet named a replacement for Porter. In other personnel news, DreamWorks Animation has hired Philip Cross as chief accounting officer. Cross had been serving as a consultant for the studio, and from 1980 to 2006 worked with PricewaterhouseCoopers LLP, as the firm’s technology, information, communications and entertainment senior partner. “We are pleased to welcome Phil to DreamWorks Animation,” said the studio’s CFO and president, Lew Coleman. “As a seasoned finance professional, Phil brings a wealth of experience and knowledge that comes from more than 35 years in both accounting and the entertainment industry.” L AT E F L A S H I NBC SUES OVER DEAN MARTIN DVD RIGHTS He’s been dead nearly 12 years. But like a lot of entertainment icons, Dean Martin’s stock is apparently on the rise. NBC Universal last month filed a copyright infringement lawsuit against a direct-marketing company — among others — that has been selling The Best of the Dean Martin Variety Show on VHS and DVD on the Internet and by mail since 2003. “The Dean Martin Show,” which featured the popular crooner, aired weekly on NBC from 1965 to 1976. The suit, filed Aug. 23 in Los Angeles District Court, alleges that Guthy-Renker Corp. and Greg Garrison Productions (GGP), which produced the DVDs, used material portions of at least 86 episodes of the show that appear on the DVDs without permission. Garrison, who died in 2005, was the producer of Martin’s TV show. The suit seeks a jury trial and unspecified damages. Representatives from Guthy-Renker and GGP were not immediately available for comment. — Erik Gruenwedel HOME MEDIA MAGAZINE (ISSN 1934-9882) is published 52 times per year by Questex Media Group, Inc., 306 West Michigan Street, Suite 200, Duluth, MN 55802. Subscription rates: $49.99 for one year in the United States and Possessions; $79.99 for one year in Canada and Mexico; all other countries $99.99 for one year (by surface mail). Add $75 annually for air-expedited service. Single copies (prepaid only): $6.99 in the United States, $8.99 in Canada and Mexico, $13.99 all other countries. 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Table of Contents Feed for the Digital Edition of Home Media Magazine - September 16-22, 2007

Contents News Commentary TV DVD Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Christian Entertainment Review

Home Media Magazine - September 16-22, 2007

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