Dish Network, Carl Icahn bid to buy bankrupt Blockbuster
Dish Network and billionaire Carl Icahn are among those bidding for buy the video chain in a Manhattan bankruptcy court.
A bankruptcy auction of Blockbuster Inc was set to stretch into a second day after preliminary talks between bidders and the movie rental chain's representatives dragged on late into the day on Monday, a company spokesman said.Skip to next paragraph
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Blockbuster did not say how many bidders it attracted, but halls outside the auction room in Manhattan bankruptcy court were packed with attorneys and investment bankers refining their bids throughout the day.
In a room set aside for reporters, a video of the auction room was being played without sound, as the preliminary discussions were private.
With talks wrapping up Monday evening, the bidding itself is set to take place on Tuesday and will be public, said Blockbuster spokesman Michael Freitag.
Once the world's largest movie rental chain, Blockbuster had a market cap of more than $5 billion at its peak in 2002 but came under pressure from mail-order and digital competitors such as Netflix Inc. The company put itself up for sale in February after a reorganization plan fell apart.
The next owner could preserve Dallas-based Blockbuster as an ongoing business, though bidders also have the option of liquidating the company, or closing it down. Proceeds of the sale will become part of the bankruptcy estate.
Satellite television company Dish Network Corp and billionaire investor Carl Icahn qualified for the auction by submitting bids last week, the Wall Street Journal reported on Friday, citing people familiar with the matter.
A Dish spokesman declined to comment. Icahn did not return calls seeking a comment, but a room at the courthouse was reserved for the Icahn group.
Activist investor Icahn, a large holder of Blockbuster senior debt, has long been interested in the company. He and a group of hedge funds provided Blockbuster with a $125 million loan to operate during bankruptcy.
Gordon Brothers Group and Hilco Merchant Resources also submitted a joint bid for Blockbuster's inventory, the Journal said on Monday. The team planned to take over Blockbuster stores and liquidate them if it wins the bidding, the Journal said.
A spokesman for Hilco declined comment. Gordon Brothers Group did not immediately respond to emails seeking comment.
The auction will be followed by a hearing before federal bankruptcy judge Burton Lifland on April 7 to approve the new owner.
DIGITAL MOVIES MAY BE ATTRACTIVE
A $290 million "stalking horse" bid submitted in February by a group of hedge funds led by Monarch Alternative Capital LP had set the floor for the bidding. The group also includes Owl Creek Asset Management, Stonehill Capital Management and Varde Partners.
SK Telecom South Korea's top mobile carrier, was also interested in investing in Blockbuster, an official of the company told Reuters last week.
Blockbuster has about 2,400 stores but only about 1,700 are part of the auction, with the rest slated for closing.
Blockbuster's assets also include movie kiosks and a by-mail video business. It also has digital delivery agreements with Hollywood studios including Sony Pictures, Twentieth Century Fox, Warner Home and Universal Studios.
Blockbuster's online content might be one of the attractions for Dish Network's Chief Executive Charlie Ergen, who could use it to build an online product for delivering movies, said Marci Ryvicker, a Wells Fargo analyst.
"It is probably a good way to acquire a massive amount of content," Ryvicker said.