The Los Angeles Times is reporting that Blockbuster Video is soon to declare bankruptcy. The former video-store giant has been struggling to compete against newer services Netflix and Redbox. Blockbuster owned the video-rental market for more than 10 years, but has now reportedly amassed $1 billion in debt, and is preparing to file Chapter 11 bankruptcy in September. The company has informed major Hollywood studios of its decision to do so.
Last week, Blockbuster CEO Jim Keyes journeyed from Dallas, where the company's based, to Los Angeles, where he held meetings with 20th Century Fox, Paramount, Disney, Universal, Sony and Warner Bros. A team of restructuring gurus joined Keyes at these meetings. Blockbuster's post-bankruptcy plans are to continue its burgeoning Netflix-type mail-order/online rental business, and to expand into digital movie distribution.
Blockbuster, which Viacom bought in 1994 for $8.4 billion, now has a market value of $24 million. It has already closed 1000 stores in the past year, and is looking to close 500 to 800 more, as well as escape large amounts of debt it owes to landlords. The company said it hopes its period of bankruptcy will last about five months.