Blockbuster bids due Monday


There are reported to be several parties bidding in a US Bankruptcy Court auction Monday (4/4) for Blockbuster. But it was the report Friday by the Wall Street Journal that Dish Network is one of them that has some people scratching their heads.

Why would Charlie Ergen want the remains of the struggling video chain? Wells Fargo Securities analyst Marci Ryvicker provided an answer in a note to clients.

“There are many reasons why DISH would be interested in acquiring Blockbuster: The WSJ mentions value-added service to DISH’s on-demand product.  We think that Blockbuster could be the way that Charlie Ergen gets content for a potential over-the-top product – one that could end up competing with Netflix down the line,” she wrote.

But Ryvicker doesn’t expect Dish to go into the bidding with an open checkbook. “While there was no quantification of DISH’s bid, the WSJ stated that most suitors made minimum offers to qualify for Monday’s auction, bidding no more than $296 million.  Given Charlie Ergen’s track record, we couldn’t see why he would bid more than this just to qualify for the auction,” the analyst said.

“We view the potential news as a positive.  The more data points we glean, the more it sounds like Charlie Ergen has a plan to stay relevant in an evolving video world.  We had often thought that Charlie Ergen is interested in providing an over-the-top product but the one piece we were missing was how to get content – Blockbuster may be the (first) answer,” Ryvicker said.

RBR-TVBR observation: Should Dish emerge the winner you can bet that Charlie Ergen knows exactly what he wants Blockbuster for. But you can also bet that he won’t overpay. He’s happily walked away empty-handed from other bidding wars when the price moved beyond what he wanted to pay.