10-K Watch: Blockbuster Warns Of Crushing Debt Problems; Chapter 11 Filing Remains A ‘Possibility’


A few weeks after reporting that its net loss grew in Q4, Blockbuster’s 10-k presents some stark details about its debt struggles. The movie rental chain’s SEC filing served as a warning of sorts, with Blockbuster (NYSE: BBI) saying that its roughly $1 billion in debt could become more difficult to pay down. As a result, Blockbuster may consider diverting more cash flow from operations to debt service payments. The company added it was pursuing an exchange of all or part of its senior subordinated notes for Class A common stock — something that could force it to seek Chapter 11 bankruptcy protection.

In the interim, the company is currently looking into selling off its international operations as way to ease the heavy debt burden.

Blockbuster is also remaining cautious in terms of pursuing the rental download model and video-on-demand. It has already closed several hundred retail outlets, while at the same time, it


Nomo Blockbuster

Possibility? With Blockbuster, it’s definitely more of a ‘certainty.’ The company may as well skip a few chapters and go straight to liquidation, instead. It is Blockbuster’s “cautious” and clueless ways that have brought it to the point where it is now and that is why Blockbuster should not survive. I do not know what makes Blockbuster think that the studios will side with it. New titles are often limited in availability and there’s far more lost revenue than gained when all is said and done.

Ed Dunn

The funny part is the mailbox I go to drop off my Netflix movies is in front of the Blockbuster store…

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