April 17, 2024

DealBook: Dish Network Wins Blockbuster Auction

After a bankruptcy auction that extended into the early hours on Wednesday, Dish Network announced that it had emerged as the winner of Blockbuster’s assets, with a bid valued at $320 million.

Dish, the satellite television company, is set to pay roughly $228 million in cash, after accounting for certain adjustments. And the deal is expected to be completed in the second quarter.

“Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network,” Tom Cullen, an executive vice president at the company, said in a statement. “While Blockbuster’s business faces significant challenges, we look forward to working with its employees to re-establish Blockbuster’s brand as a leader in video entertainment.”

The bankruptcy auction, which started in court on Tuesday morning, later moved behind closed doors with several potential buyers still in the running.

By late afternoon on Tuesday, three bidders remained: Dish Network; a group of liquidators led by Carl C. Icahn, a large Blockbuster investor; and a consortium of creditors known as Cobalt Video, a group that included Monarch Alternative Capital.

Cobalt, at the time, seemed to be the front-runner with a $308.1 million bid. Mr. Icahn’s group had made a $310.6 million offer, but it included rolling up existing debt holdings into a bankruptcy loan. Dish’s proposal was the lowest at $307.1 million, after other bidders dropped out of the process earlier.

But after the negotiations moved out of the court, Dish jumped to the front of the pack, with a bid valued at $320 million.

Dish has been an active acquirer, as its founder, Charles Ergen, looks to expand his digital empire. In March, the company agreed to buy the satellite operator DBSD North America for about $1.4 billion once it emerged from bankruptcy.

Mr. Ergen, through another venture, EchoStar, has been buying up debt in the satellite company TerreStar Networks. In February, EchoStar announced plans to buy Hughes Communications, the satellite Internet company, for $1.3 billion.

With Blockbuster, Mr. Ergen and Dish gain a large retail presence through which they can potentially sell services. In its press statement, Dish highlighted Blockbuster’s “more than 1,700 store locations,” as well as its “highly recognizable brand and multiple methods of delivery.”

The bankruptcy court will have to approve the deal.

Article source: http://feeds.nytimes.com/click.phdo?i=751c5516b25d4f87407700db07eb116c

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