Petteri Pyyny
20 Sep 2003 17:04
The Wall Street Journal reports that video rental giant Blockbuster and United States' largest direct-market retailer of DVDs and videos, Columbia House are considering a merger.
Both companies deny commenting on rumors, but according to analysts, such merger would make sense and would help Blockbuster to capitalize the growing DVD market better. Blockbuster's worldwide revenues for year 2002 were over $5.5 billion (of which appx. 80 percent were generated in the U.S.). Columbia House's annual sales are appx. $1 billion.
Blockbuster currently sells most of its for-sale DVDs (sales are increasing their percentage within Blockbuster's revenues) at average $21.99 while most retailers sell their movies at $19.99. Analysts predict that Blockbuster could lower its prices without lowering its profit margins if it would be able to combine its purchase power with another retailer, such as Columbia House.
Blockbuster's majority owner, with 80 percent stake, is Viacom (company who also owns CBS, MTV, Paramount, VH1, etc).
Source: Star Telegram