by ADAM THIERER on SEPTEMBER 19, 2005
In previous posts earlier this course of instruction, I warned that efforts by the Federal craftsmanship Commission (FTC) to block the proposed acquisition of video rental sign of the zodiac Hollywood Video by Blockbuster Inc. would handlely acquit to the demise of both companies in the long run. Well, excuse me patch I toot my own horn for a moment, exclusively it appears that I was likely right, and sooner than I expected.
Joe Flint and Kate Kelly depict in todays Wall Street journal (New Signs of Strain for Blockbuster p. B5) that Blockbuster Inc. is facing unexampled pressures as signs increase that a sharp decline in the video-rental market is putting a strain on the federations finances. The companys stock prices fell by 9.7% on Friday, hitting a 52-week low of $4.60 per share. This came on discussion that Movie Gallery Inc., the industrys #2 firm, was reportage that sales at many of its stores were expected to drop by 8-10% this quarter.
Whats happening is clear: technological and market evolution are finally catching up with this old traffic and is about to wipe it from the face of the Earth.
With all the new sources of competition out thereNetflix and cheap DVDs at WalMart, online movie download services, cable and satellite movie channels plus video-on-demand, phone company entry into the video business, all sorts of handheld mobile media gad sterilises like the PlayStation Portable, and so onits no wonder that Blockbuster and others in this sector are struggling.
In fact, Blockbuster Chairman and chief executive officer John Antioco admitted to the Journal that the rental industry is in the ice chest and the firms SEC filing last year said that it anticipates a faster than expected decline in the store-based video rental market. So even Blockbuster sees the write on the wall.
This is what makes the FTCs efforts to stop the Blockbuster-Hollywood Video merger so troubling. Clearly, this is a sector in the midst of...If you want to get a full essay, order it on our website: Orderessay
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