NEW YORK - Dish Network Corp.'s agreement to buy Blockbuster Inc.'s assets out of bankruptcy could keep the movie-rental chain and its blue-and-gold logo from disappearing.
But whether the No. 3 pay TV company can use Blockbuster’s brand, stores and streaming-video capabilities to create services more relevant to the age of Netflix and Hulu remains to be seen.
Dish, headed by billionaire Charles Ergen, won a two-day bankruptcy auction for Blockbuster that stretched into the early hours of Wednesday morning with a bid valued at $228 million.
Dish has so far been mum about specific plans for Blockbuster, but in its announcement, the company highlighted the 1,700 stores that will remain and “multiple methods of delivery.”
Dish spokeswoman Francie Bauer said the Englewood, Colo.-based company would not comment further since the deal must receive bankruptcy court approval.
A hearing for approval is set for today. Dish expects the deal to close in the second quarter.
Satellite TV providers have been losing new subscribers as cheaper alternatives such as Hulu and Netflix become more popular.
Acquiring Blockbuster will make Dish a more viable competitor in streaming video online. It’s doing so at a price easily affordable for Dish, which had nearly $3 billion in cash as of Dec. 31.
“Ergen continues to look for distressed assets selling at bargain prices,” said RBC Capital Markets analyst Ryan Vineyard. Blockbuster “could transform Dish into a much more viable online competitor than it is now.”
Dish beat out billionaire investor Carl Icahn and a group of debt holders for the Dallas movie-rental chain, which filed for Chapter 11 bankruptcy protection in September.
Icahn had teamed with a group of liquidators. Analysts say it was likely he would have liquidated the company. Dish has more of a vested interest in keeping Blockbuster going, but analysts are split about whether it will keep the stores themselves open.