Blockbuster To Circuit City: Group Suicide? - HotHardware
Blockbuster To Circuit City: Group Suicide?

Blockbuster To Circuit City: Group Suicide?

Blockbuster is offering to buy Circuit City. They made the offer privately in February, and made it publicly today; a defacto appeal to Circuit City shareholders to pressure the board to sell. If you were on the Lusitania, would you accept a ride on the Titanic?  Circuit City is struggling, Blockbuster  still has rental-movie money to throw around, but can read the video-on-demand writing on the wall. Let's play Corporate-Speak Bingo with Chairman and CEO of Blockbuster Jim Keyes' statement.

"Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage. We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies."

Mr. Keyes continued, "At Blockbuster, we have successfully deployed a series of strategic initiatives designed to provide our customers with convenient access to media content. These strategic initiatives have already improved our financial results. Driven by strong performance in our domestic same-store revenues, we expect first quarter 2008 adjusted EBITDA to be approximately $110 million versus $23 million for the same period last year.

Wow, he used them all. Ah, "synergy." Baseball managers had a less corporate expression for a common problem with the concept: "You can't make a nickel out of five pennies." But I wouldn't cry too much for Blockbuster, even in the long run. They'll eventually sell all that real estate they own under the video rental stores and find something to buy that makes money.
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If it helps Circuit City compete with Best Buy, I guess it's good.  But I question that Blockbuster is doing that well anyway, so maybe they should keep their hands off Circuit City for fear of hurting them more. 

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