Blockbuster wants Circuit City
Blockbuster has made public an offer to buy Circuit City, an offer that was made privately in February but was not embraced by Circuit City brass. Will both companies benefit from the buyout? Jeremy Hobson reports.
A Blockbuster video rental store (ROBERT SULLIVAN/AFP/Getty Images)
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Renita Jablonski: Blockbuster wants to infuse new energy into Circuit City. The movie rental place wants to buy the electronics store. Jeremy Hobson has more.
Jeremy Hobson: Blockbuster privately offered to buy Circuit City back in February, but Circuit City's top brass has been cool to the idea. So, Blockbuster made the offer public. Let the shareholders decide. Industry analyst Stephen Baker with the NPD Group says the deal could prove helpful to both companies, especially Circuit City, which has been struggling.
Stephen Baker: And they need ways to get people into the store. You know, Blockbuster offers them, with the rental model, a way for them to drive lots of traffic into their stores.
In other words, would you like a plasma screen with your DVD rental today? But Baker says Circuit City's hesitance to move forward is understandable, given the question of how much rental traffic is going to move online.
Baker: If it is going to move online, they're just as well positioned as Blockbuster in terms of having relationships with the studios and the music companies to be able to deliver that.
And for its part, Circuit City says this morning it's also got concerns about Blockbuster's ability to finance the deal.
I'm Jeremy Hobson for Marketplace.
