Home Media Magazine - March 9, 2009 - (Page 19) www.homemediamagazine.com NEWS Edward Woo, research analyst with Wedbush Morgan Securities in Los Angeles, which tracks Blockbuster, said studios and video game publishers should be concerned since he estimated Blockbuster spent about $2.7 billion on games and DVDs in 2007. “They wouldn’t hire a [bankruptcy] lawyer unless they think they will use it,” Woo said. He said Blockbuster, like many retailers, has faced liquidity issues. Woo said other analysts said Netflix and Redbox would be short-term winners if Blockbuster filed Chapter 11 — a scenario most doubted would transpire. Richard Ingrassia with Roth Capital Partners said quarterly margin increases and in-store consumer traffic at Blockbuster portend an unlikely “covenant violation.” Stacey Widlitz with Pali Capital believes Blockbuster will report a boost in same-store rentals when it reports final fourth-quarter and fiscal-year 2008 results March 19. Indeed, Blockbuster March 5 in a preliminary financial release said domestic same-store sales increased 4.4% in the Q4 (ended Jan. 4), spurred by a 36.5% jump in retail sales driven by video games, game merchandise and consumer electronics. Quarterly domestic same-store rentals decreased 2.6%, but increased 1.2% for the fiscal year. Bankruptcy Rumors False, Blockbuster Says Continued from page 1 $200 million credit revolver that matures (comes due) in August. “We are pursuing financing options, and we hired Kirkland for that effort,” Raskopf said. “We do not intend to file for bankruptcy.” She said it was normal to hire lawyers, bankers and financial advisors when exploring different options. Raskopf agreed that generating a substantial line of credit in the current economy is challenging. She said Blockbuster had a fallback option that included selffinancing through the company’s considerable cash flow. This option would allow Blockbuster to sustain operations through the end of 2009. “We are hopeful that won’t be necessary,” Raskopf said. She said she understood why the media jumped on the bankruptcy angle, considering Kirkland’s expertise in it. “They are also known for helping people with their capital-raising initiatives,” Raskopf said. “That’s why we’ve hired them.” Blockbuster was saddled with more than $1 billion in debt following its spin-off from Viacom in 2004. It has whittled down long-term debt obligations to about $600 million with $95 million in available free cash, according to a regulatory filing. Oscar Winner ‘Slumdog Millionaire’ Heading to Disc By John Latchem PRODUCT Director Danny Boyle’s rags-to-riches story Slumdog Millionaire heads to DVD and Blu-ray Disc March 31 from 20th Century Fox Home Entertainment. The critically acclaimed film earned eight Academy Awards at the recent ceremony, earning Oscars for best picture, director, adapted screenplay, original score, song (“Jai Ho”), editing, cinematography and sound mixing. The ‘R’-rated movie tells the story of an 18-year-old orphan from the streets of Mumbai who is on the Blockbuster Digital Model Continued from page 1 with different models.” Anderson said he likes the idea of a touchscreen kiosk model that can offer content on the spot or send downloaded entertainment to the home remotely. In January, Blockbuster partnered with Sonic Solutions to distribute its content digitally to homes and portable media devices. But Anderson said Blockbuster is more focused on download vs. streaming because of bandwidth and advertising. “But a significant number of consumers can’t or won’t get that bandwidth,” he said. “We may end up technically streaming to a device that can’t support progressive play.” And timeliness is keeping Blockbuster looking at VOD and electronic sellthrough, instead of ad-supported streaming, which he said have different licensing rules. verge of striking it rich on India’s “Who Wants to Be a Millionaire?” The $29.98 DVD will include the featurette “Slumdog Dreams: Danny Boyle and the Making of Slumdog Millionaire”; deleted scenes; commentary by Boyle and star Dev Patel; commentary by producer Christian Colson and writer Simon Beaufoy; and “Slumdog Cutdown.” The $39.98 Blu-ray Disc includes all the DVD content, plus “From Script to Screen: Toilet Scene”; the Indian short film Manjha; a Bombay Liquid Dance music video; and a digital copy. JUST ANNOUNCED A Weekly Product Update* Trans World Boosting BD Continued from page 1 Slumdog Millionaire STREET DATE Notorious BOX OFFICE (MILLIONS) The Uninvited TITLE PREBOOK GENRE PRICE Slumdog Millionaire 3/31 Now $117.7 Drama DVD $29.98, BD $39.98 Fox. 2008. Dev Patel, Freida Pinto, Madhur Mittal, Irrfan Khan, Anil Kapoor. From director Danny Boyle comes the story of an orphan from Mumbai who goes on a quiz show to reunite with his lost love. Winner of eight Academy Awards, including best picture. Notorious 4/21 3/25 $36.8 Drama DVD $29.98, BD $39.99 Fox. 2009. Angela Bassett, Jamal Woolard, Derek Luke, Anthony Mackie, Naturi Naughton. The controversial biopic on the life of famed rapper Christopher “The Notorious B.I.G.” Wallace. Also available in a three-disc collector’s edition ($34.98). Uninvited 4/28 3/17 $27.2 Horror DVD $19.99, BD $29.99 Paramount. 2009. Emily Browning, David Strathairn, Elizabeth Banks, Arielle Kebbel. A girl is prompted to investigate the suspicious death of her mother when her mother’s ghost begins to haunt her. The Wrestler 4/21 3/11 $23.9 Drama DVD $29.98, BD $39.99 Fox. 2009. Mickey Rourke, Marisa Tomei, Evan Rachel Wood. A professional wrestler, desperate to hold on to his former glory, stages a rematch of his most famous fight. Includes the featurette “Within the Ring” and The Wrestler music video performed by Bruce Springsteen. Last Chance Harvey 5/5 4/2 $14 Drama DVD $29.98, BD $39.98 Anchor Bay. 2009. Dustin Hoffman, Emma Thompson, Eileen Atkins, James Brolin, Richard Schiff. A down-on-his-luck man meets a lonely woman in an airport bar, and they are inspired to transform their lives. * In order of box office, then prebook date properties, said it would work with studios to develop additional instore BD and DVD promotions, in addition to increasing store exposure to game hardware and software. “We are only generating $75 million [in games] and in only 347 stores, or just 8% of total sales,” said founder and CEO Robert Higgins in an analyst call. “It represents a tremendous opportunity to increase sales and profit. We are no longer a music retailer.” Indeed, Trans World reported a 21% decline in fourth-quarter (ended Jan. 31) same-store music CD sales; a 20% drop for the fiscal year. Music represented 35% of revenue, compared to 39% in fiscal 2007. Same-store DVD video sales fell 9% in the quarter, but declined just 3% for the year due in large part to double-digit growth of Bluray. Movies represented 42% of Trans World’s business, compared to 39% in 2007. COO Jim Litwak said the company actually gained market share in fourth-quarter catalog DVD sales despite the category’s lackluster overall performance. He said the company needed to build a sustainable business model that was less impacted by technological advances on physical product. Litwak said Trans World would turn around underperforming businesses such as games, provide a stronger store presence in consumer electronics and expand space allocations for Blu-ray. “Clearly, a stronger merchandising strategy is critical to our success,” he said. Trans World posted a quarterly net loss of $9.4 million, compared to a loss of $66 million during the prior-year period. Results included a non-cash impairment charge to write down certain assets totaling $15.2 million. Quarterly sales fell to $344.7 million, compared to $451.5 million last year. Comparable-store sales for the quarter decreased 14%. For the year, total sales fell 22% to $988 million, compared to $1.266 billion in 2007. Comp-store sales for the year dropped 11%. The net loss for 2008 was $69 million, compared to a loss of $99.4 million in fiscal 2007. The chain closed 74 stores in the quarter to end 2008 with 712 stores, compared to 813 during the prioryear period. March 9–15, 2009 Home Media Magazine http://www.homemediamagazine.com
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