Dish abandons plan to re-vamp Blockbuster as Netflix competitor
Dish Network (Nasdaq: DISH), which bought Blockbuster in April 2011, has abandoned a plan to try to re-vamp the once-bankrupt company into a Netflix (Nasdaq: NFLX) competitor and distributor of Dish handsets that connect the company's satellite spectrum to terrestrial towers, according to Bloomberg.
Charlie Ergen, Dish's founder and chairman, said in an interview that he would not consider buying Blockbuster a "mistake" but also wasn't sure it would be a "transformative decision."
Ergen had hoped to use Blockbuster's 1,700 stores to sell Dish devices that could stream Blockbuster movies, but was ultimately unsuccessful "when U.S. regulators didn't immediately approve a waiver allowing Dish to use its satellite spectrum for terrestrial data and voice transmission," according to an article in the Chicago Tribune.
Since Dish can no longer turn a profit on all of the Blockbuster stores, it has begun selling them to recoup some of its costs. As of August, only about 900 Blockbuster stores remained in the United States.
"When your lease runs out on the stores, you can't re-up because you can't make enough money from just selling DVDs," explained Ergen.
The acquisition of Blockbuster, however, was not a complete failure. According to Bloomberg, Dish has created a hybrid service, "Blockbuster @Home," which allows subscribers to rent DVDs by mail as well as stream movies and shows to computers and TVs. Sound familiar?
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