In a filing with the Security and Exchange Commission, video rental chain Blockbuster, the company admits economic hard times and a tight financial situation have raised “substantial doubt about our ability to continue as a going concern”—and the company might be forced to close some of its retail locations in order to cut costs and make ends meet. The company recently took out another $250 million in credit—on top of an existing debt of $780.9 million—in an effort to shore up its bottom line: the new debt comes to term September 30, 2010.
The news comes in the wake of Blockbuster partnering with TiVo to offer streaming on-demand video and movie rentals to TiVo owners and a partnership with Sonic Solutions to offer streaming movies via the Internet. Blockbuster was also in negotiations to acquire ill-fated consumer electronics chain Circuit City, but pulled out of the deal when the numbers didn’t look like they were going to line up.
Blockbuster has been in a hard-fought battle with video rental service Netflix, which moved aggressively into the rent-by-mail and online streaming markets ahead of Blockbuster, which relied on its existing network of almost 7,500 retail locations to propel its business. Blockbuster has also seen retail competition from the likes of Redbox, which offers self-serve DVD rental kiosks at locations like grocery stores and malls.
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