Bit Rate

The Blockbuster Channel?

4/29/2008 12:53 AM

What, indeed, is Blockbuster trying to become?
The Wall Street Journal reports today that the video-rental chain is in talks to get a piece of the (still unnamed) Viacom-led premium TV channel that will pool movies from Viacom’s Paramount Pictures, Metro-Goldwyn-Mayer Studios and Lionsgate (see Showdown With Showtime).

This comes as Blockbuster is embarking on an unsolicited $1 billion-plus takeover of Circuit City, an idea that has been widely dissed by Wall Street and one that Circuit City’s board didn’t jump at either.

So what’s it going to be, Jim Keyes: content or hardware? Blockbuster, given its resources (e.g., $184.6 million cash on hand) will need to pick a target.

Here’s a Blockbuster spokeswoman to the WSJ on the Viacom movie channel talks: "We are busy transforming Blockbuster into a multiplatform provider of convenient access to media entertainment. To that end, we’re exploring our options so it’s not surprising there are rumors out there."

Blockbuster, as the WSJ article notes, used to be majority-owned by Viacom. That serves as a good reminder of Blockbuster’s true business: renting movies. Not selling DVD players, or HDTV sets, or radar detectors.

There are obviously questions about how the proposed Paramount/MGM/Lionsgate channel will fare as a fourth "premium entertainment service." If I were Blockbuster, though, that gamble looks better than doubling down on bricks and mortar.