Blockbuster's Bargain: The Official Movielink Purchase Price

Last week, on August 8th, when Blockbuster (BBI) acquired Movielink, the purchase price for the transaction was widely reported to be a steal at an amount less than $50m and maybe even less than $20m. How low a price, or how much less than those numbers, however, was unclear at the time.

Today, just how much of a bargain Blockbuster got came to light. According to Blockbuster’s official 8-k filing, the purchase price (less adjustments for cash and working capital) was a tiny $6.6m.

That’s an off–the–back–of–the–truck, fire–sale get–it–off–my–hands kind of bargain price; especially considering how close Blockbuster was to buying the company for around $70m just a year ago.

Adding more color and perspective: in July 2006, Movielink’s competitor CinemaNow closed a 5th round (Series E) financing bringing in $20.3m from Cisco (CSCO), Lionsgate (LGF), Transcosmos , Echostar (DISH) and Index Holdings. The total investment in CinemaNow (including the Series E round) exceeds $40m. CinemaNow and Movielink have similar asset platforms not counting usage metrics.

Additionally, while no numbers on Movielink’s financing history have been released, it’s believed they were capitalized by their movie studio owners with $80 to $100m over their corporate lifespan (some reports have even set that number as high as $150m.)

For $6.6m, Blockbuster bought the assets for pennies on the dollar.

Comments

[dtapia]

Makes you wonder why BBI could get the company for so cheap. The 8-K doesn't tell us exactly what Blockbuster got for their $6.6m. If they hope to build a streaming service, like the one Netflix provides, they will have to dump a lot of money into it to build it up...Money that blockbuster doesn't have. The current liquidity crunch isn't going to be helping them any, either.