Blockbuster in talks to buy Movielink
UPDATE: Retailer would pay less than $50 million for movie download service
By Jennifer Netherby -- Video Business, 3/1/2007
MARCH 1 | Blockbuster is in advanced talks to acquire studio-owned movie download site Movielink, a senior studio source confirmed.
Movielink and Blockbuster officials declined to comment on the proposed deal.
Blockbuster reportedly would pay less than $50 million in cash and stock for the company, which is owned by NBC Universal, Paramount Pictures, Sony Pictures, Warner Bros. and MGM.
The studios launched Movielink in 2002 to combat online piracy. The site has been long-rumored to be up for sale, with Blockbuster one of the leading contenders. Last summer, Movielink’s studio backers reportedly rejected a $70 million offer from Blockbuster.
Studios are still talking to a number of potential buyers, the studio source said.Blockbuster has said it plans to enter the download business. The retailer is already an investor in Movielink rival CinemaNow, but a Movielink acquisition would put Blockbuster in the download business immediately with an established company that already has movie deals with nearly every major studio.
Blockbuster competitors Netflix, Wal-Mart and Amazon have all launched online movie services over the last year.
Despite being one of the earliest players in the business and its studio backing, Movielink has a small share of the paid download market, which is dominated by Apple iTunes. According to the latest numbers from the NPD Group, Movielink had a 3% share in the third quarter of 2006, compared to iTunes’ 90% share.
NPD VP and senior entertainment analyst Russ Crupnick said an acquisition by Blockbuster might not help the company in the short term but could benefit Blockbuster in the long term.
“What it helps Blockbuster to do is to really own the whole customer experience available to people out there, particularly heavy video people,” Crupnick said. “Consumers don’t just stake out one place to buy content.”
Blockbuster chairman and CEO John Antioco has been talking in broad terms about his company’s plans to find a “cost-effective” way to enter the download business sometime this year. He mentioned the idea again Feb. 27 during Blockbuster’s conference call on fourth-quarter earnings, saying he sees downloading as still a small business but important in allowing consumers another choice in how they receive entertainment.
