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Summary:

Ailing video rental chain Blockbuster made a baffling bid to purchase electronics retailer Circuit City for $1 billion. The idea is to create a company that is at the nexus of digital media entertainment and convergence. Seems better positioned to be at the nexus of failure […]

Ailing video rental chain Blockbuster made a baffling bid to purchase electronics retailer Circuit City for $1 billion. The idea is to create a company that is at the nexus of digital media entertainment and convergence. Seems better positioned to be at the nexus of failure and bankruptcy.

Blockbuster first floated the idea to Circuit City back on Feb. 17, but then took the offer public after Circuit City wouldn’t disclose its books. Circuit City says it has “fundamental questions” about how Blockbuster will finance its bid (maybe it could take out a sub-prime loan). Circuit City operates 682 stores in the United States and another 700 in Canada.

Blockbuster CEO Jim Keyes told The Wall Street Journal that he sees Apple’s retail stores as a model for the merger, which makes us believe that Mr. Keyes has never actually set foot inside an Apple store or a Circuit City.

First off, both companies are struggling to find their way into the digital age. Blockbuster’s attempts to fend off Netflix have resulted in epic failure, and Circuit City is losing ground to the likes of Best Buy and Wal-Mart. Loser + Loser does not equal winner.

I’m all for Blockbuster leveraging its real world locations to pave the way to its digital future. But in an industry that is moving entirely to bits, Blockbuster should be looking for ways to convert its existing locations into digital hubs, not adding another 1,300 retail locations.

And Mr. Keyes seems to be missing the allure of the Apple store, which is a sleek, sexy experience with a singular focus on one brand. Circuit City, on the other hand, is just a lifeless big-box retailer where people go to look for a bargain.

  1. [...] April 14, 2008 at 9:12 AM PT Comments (0) So, Blockbuster’s genius CEO, Jim Keyes, wants to combine his struggling retail giant with Circuit City. WHY? It is the kind of deal you can only justify if you’re coming off a [...]

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  2. Rigging Mike Monday, April 14, 2008

    What is up with Circuit City. Years ago CompUSA tried buying Circuit City. Not only did they not acquire CC, but CompUSA is just about out of business.

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  3. [...] Store and DTS-HD Master Audio – Gizmodo TwitLinks: Not Useful, Not A TechMeme Killer – TechCrunch Blockbuster Tries to Buy Circuit City – NewTeeVee (No Ratings Yet) digg_url = [...]

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  4. [...] company is still moving ahead with its boneheaded plan to buy Circuit City. And Circuit City’s largest shareholder is now pressuring the electronics [...]

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  5. [...] Vid-Biz: Circuit City, Upfronts, Bebo Circuit City Opens Up to Blockbuster; rental chain and Carl Ichann allowed to conduct due diligence on the company, Ichann may fund buyout. (paidContent) (previous coverage) [...]

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  6. [...] I’d like to say we told you so, the more accurate response would be everyone told you so; a champion for the deal was hard to come [...]

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  7. [...] has been through an… interesting year. It made a bizarre bid to buy Circuit City back in April (calmer heads prevailed and it backed out). Then it was reported that the rental [...]

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  8. The only retailer NOT struggling is Walmart. I don’t understand why so many people are making it sound like Circuit City is the ONLY retailer struggling right now.

    Bestbuy might be beating CC, but only slightly. They are moving towards bankruptcy themselves.

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