Blockbuster May Be Headed for Bankruptcy
August 31, 2010
By James L. Hirsen, J.D., Ph.D.
contributor to Newsmax.com
The terrain of the entertainment media landscape is transforming right before our very eyes.
Blockbuster Inc. is looking as if it may soon become another victim of the changing technology and a casualty of the Obama economy.
The formerly pre-eminent video firm is reportedly going to seek Chapter 11 bankruptcy protection.
The Los Angeles Times reported that Blockbuster told Hollywood studio executives that it is considering such a filing. The company has also warned shareholders in recent quarterly filings that bankruptcy is a real possibility.
Earlier in 2010, the company missed a $42 million payment to bondholders. An extension was granted until Sept. 30.
Like so many individuals and businesses in the country, Blockbuster is overloaded with debt. Shockingly, the video concern has amassed a whopping $1 billion that it owes to creditors.
Bankruptcy for Blockbuster could arrive in September, paving the way for a lowering of the company’s debt and facilitating the walking away from many of its thousands of leases in shopping centers across the nation.
With the advent of the streaming of films and TV shows, a new business model has been created, exemplified by the success of Netflix Inc., Hulu, Apple TV, and Coinstar Inc.’s Redbox kiosks.
The Financial Times is reporting that Google’s YouTube is negotiating with Hollywood studios to partner in a pay-per-view site, which is set to be online by year's end.
Google intends to charge in the neighborhood of $5 each for video streams of movies and television programs.
No doubt Hollywood studios are feeling the pinch of lower DVD sales. But you can bet they’re loving the typical 80 cents from every dollar that video streams are producing.
Blockbuster sure could have used a sweet government bailout like the one former U.S. Secretary of the Treasury Henry Paulson is famous for serving up.
Oscar winner Curtis Hanson is set to direct and executive produce a new made-for-cable TV film dealing with events that led to the infamous financial bailout of 2008.
A second Oscar winner, William Hurt, will star in the upcoming HBO movie titled “Too Big to Fail.” Hurt will portray Secretary Paulson.
The film will soon begin shooting, and actors are currently being sought to play Tim Geithner, Richard Fuld, and Ben Bernanke.
The HBO production is based on a book about the 2008 financial crisis that was penned by business writer Andrew Ross Sorkin who is also serving as a consultant on the project.
Sorkin is a financial columnist for the New York Times and is also founder and editor of DealBook, a financial news service published by the Times.
Although Sorkin appears to fit in quite well with Hollywood liberalism, he once opined about a government-sponsored bankruptcy for General Motors. In a Nov. 17, 2008, Times column, Sorkin wrote: “At General Motors, as of 2007, the average worker was paid about $70 an hour, including healthcare and pension costs.”
This caused ever-irritated Keith Olbermann to place Sorkin in his MSNBC “Countdown” show’s “World’s Worst Person” segment.
I wonder if this means there’s a smidgeon of hope for objectivity in the flick.