Ergen-led Dish wins Blockbuster auction for $320 million
BANGALORE |
(Reuters) - Dish Network Corp won Blockbuster Inc in a bankruptcy auction for about $320 million, a move that could see the second-largest U.S. satellite TV provider tapping the movie rental chain's online content to strengthen its offerings.Dish, led by satellite billionaire Charlie Ergen, trumped at least three other bidders, including activist investor Carl Icahn, for the one-time leader in video rentals.
Dish might find Blockbuster's online content appealing as the company could use it as a base for an online product to deliver movies.
The deal marks the second purchase of a bankrupt company by Dish. Last month, Dish got a nod from a bankruptcy court to buy hybrid satellite and land-based communications company DBSD North America for about $1.4 billion.
Ergen struck his first deal of the year in February when digital set-top box maker EchoStar Corp, where he is the chairman, agreed to buy Hughes Communications, one of the world's largest providers of broadband satellite services, for $1.33 billion.
Dish Network said in a statement early on Wednesday it expects to pay about $228 million in cash to acquire Blockbuster.
"Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network," said Tom Cullen, executive vice president of sales, marketing and programing for Dish Network.
Blockbuster had a market cap of more than $5 billion at its peak in 2002, but came under pressure from mail-order and digital competitors such as Netflix Inc. The company filed for bankruptcy in September and put itself up for sale in February after a reorganization plan fell apart.
The winning bid must still be approved at a hearing in federal bankruptcy court on Thursday.
A $308.1 million bid from Cobalt Video, a group of hedge funds headed by Monarch Alternative Capital LP, was the highest bid before the auction was moved to an attorney's office not open to the press.
Icahn had bid $310.6 million, but his bid included less money than Monarch's for notes rolled up into a bankruptcy loan and was thus considered a lower bid.
(Reporting by Sakthi Prasad and Supantha Mukherjee in Bangalore; Editing by Sriraj Kalluvila)
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