Blockbuster’s Circuit City Surprise

It seems that Circuit City’s management was just as surprised as we were about a proposed $1.3-billion offer to acquire the company by Blockbuster.

We were weighing a possible deal last week after reading a Business Week article but didn’t expect this.

“The combination…will result in an $18 billion retail enterprise uniquely positioned for the convergence of media content and electronic devices,” Blockbuster chairman and CEO Jim Keyes said in a letter to Circuit City. The two companies would create a network of nearly 10,000 stores.

Does this proposal make sense, and could it create a platform that would compete with Best Buy, discounters and online merchants like Netflix? Or is it reminiscent of other mergers over the last few years?


2 Responses to “Blockbuster’s Circuit City Surprise”

  1. 1 Marc Drasin April 15, 2008 at 5:53 pm

    This is like 2 drunken boxers trying in vain to hit something.

  2. 2 Ladislao April 16, 2008 at 9:50 am

    I think (and all of what I’m about to say is MY opinion) the reason why Blockbuster (BB) is wanting to buy Curcuit CIty (CC) is that BB is losing BIG TIME business to DVD Kiosks throughout the country. With companies like DVDNow, DVmatic, DVDPlay, MovieMate, RedBox, MovieCube and more, charging ONLY a $1.00 a DVD rental, honestly, I don’t even think they knew what hit them. These Kiosks have found there way in stores like: Kroger/KingSoopers, Randall’s, Publix, Stop & Shop, City Market, Super Fresh, A&P, H-E-B, WalMart. McD’s, Local Corner Stores and the like (you think I named enough stores?), I see why Blockbuster is TRYING to make this move. If they make this happen more power to them, but I don’t think this will pass for the price they were asking. The best way for BB to make the big bucks now is to consolidate their stores to a about a 700 – 800 SQFT space with 8 – 10 DVD Kiosks in each location and do business that way. Then they don’t have to worry about overhead and people don’t have to wait in line. BB then can charge less per video utilizing the web with online promotions, coupon codes, DVD reservations, etc. and people can get what they want at a cheaper price (and get it quicker), which is what most people want anyway…

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