Did Dish (DISH) Overpay for Blockbuster?

While it appears that Dish Network (NASDAQ:DISH) "won" the bidding war for Blockbuster, in the end the question is whether or not they actually won something.

They obviously have the assets, assuming the approval from the bankruptcy court, but there isn't much there to see what value it will add to the bottom line of Dish.

Thomas Eagan, analyst at Collins Stewart, said in a note to clients he only sees a couple of options Dish has with Blockbuster.

It could launch a service similar to Netflix (NASDAQ:NFLX) or use rights owned by Blockbuster to offer new satellite subscribers free DVDs or streaming.

Either way, Eagan said “there would be limitations to either strategy: the studio deals with Blockbuster are likely to be short-termed and may not be renewed; the streaming rights are likely shallow, in terms of number of titles; and Dish may lack the fulfillment infrastructure needed to distribute the titles.”

Tom Cullen, executive vice president of sales, marketing and programming for Dish Network, said in a statement "Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network."

It will be interesting to see if there is any value whatsoever that can be unlocked from the purchase. At this point the deal looks pricey for what Dish received in return.

Dish was trading at $24.34, up $0.03, or 0.12 percent, as of 12:17 PM EDT.

Blockbuster (OTC:BLOAQ.PK) Shuttering Another 182 Stores by End of First Quarter

Blockbuster (OTC:BLOAQ.PK) announced it'll be closing 182 stores by the end of the first quarter of 2011, as it prepared to emerge from bankruptcy.

By the first of the year, 72 of the stores will be closed, with another 110 scheduled fo closure by the end of the quarter, according to documents filed by Blockbuster in bankruptcy court.

When Blockbuster filed for bankruptcy in September, they had about 2,900 stores in the U.S. Before that they had closed approximately 1,000 stores.

Blockbuster also said they're renegotiating leases with a large number of landlords in order to lower costs. In the commercial real estate environment we're now in, they could actually have the upper hand in many store locations.

It's unknown how many stores Blockbuster will end up keeping in the company fold when they emerge from bankruptcy, but the company said they're have far fewer but more profitable stores when they do.

Is Borders (NYSE:BGP) the New Blockbuster (OTC:BLOAQ.PK)?

That Borders Group (NYSE:BGP) is in a crisis is an understatement, and appears to be the new Blockbuster (OTC:BLOAQ.PK), although at least with Blockbuster they have some hope of fighting their way slowly back via different ways of selling their products.

With Borders, what can they do to differentiate? Who would provide them with capital with basically no road map for the future as to generate revenue and earnings?

Canaccord commented, "The second-largest U.S. bookstore chain said its loss doubled in the third quarter, and warned it could face a liquidity crisis in 2011 if it does not raise money. Borders’ loss was $74.4 million between August and October, almost twice as much as the $37.7 million it lost in the same period a year earlier. Sales excluding new store openings were said to have fallen 12.6%, with no mention of performance over the important Black Friday/Cyber Monday weekend. “Our third-quarter results reflect the business challenges facing Borders and the industry at large,” noted Chief Executive Mike Edwards. While it was “disappointed” with the results, Borders had begun to 'vigorously address these challenges,' he added. More concerning, though, Borders said its borrowing capacity was reduced during the third quarter because a third-party valuation lowered the estimated liquidation value of its inventory. The company is “taking several actions” to improve liquidity, including 'detailed discussions with potential lenders for replacement financing that we believe will provide sufficient liquidity through at least the beginning of 2012.' It is also considering the sale of certain assets and some moves to boost sales, but noted that if the steps it is taking to remedy its woes are unsuccessful, it could violate its credit agreements in the first calendar quarter next year, 'which could result in a liquidity shortfall.' The next chapter for Borders is hard to read, given that hedge fund luminary Bill Ackman recently tabled a proposal for Borders to buy larger rival Barnes & Noble (NYSE:BKS). It is unusual for a smaller company to want to buy a larger company, and particularly unusual when it has no money."

Borders closed Monday at $1.24, up $0.04, or 3.33 percent. Blockbuster soared to $0.1710, up $0.03, or 21.28 percent.