Dish Network Corp. said today that it won the auction for Blockbuster Inc. with a bid valued at $228 million in cash.
As of Tuesday, the satellite TV company, billionaire investor Carl Icahn and a group of debt holders were the three remaining bidders for the Dallas movie-rental chain, which filed for Chapter 11 bankruptcy protection in September.
Dish’s bid was for $320 million, but the value decreases to $228 million after adjusting for available cash and inventory.
“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 programming for Dish Network, in a statement.
Blockbuster is already a shadow of its former self. When the chain filed for bankruptcy protection, it was down to 3,000 stores, less than a third of the peak of 9,100 in 2004. There are about 2,400 currently open with plans to close about 700 more by mid-April.
Blockbuster used to dominate the U.S. movie rental business. But it lost money for years as that business declined because customers shifted to Netflix Inc., video on demand and DVD rental kiosks.
Dish, based in Englewood, Colo., expects to close the deal during the second quarter. The transaction needs bankruptcy court approval.
Aside from Dish and Icahn, others involved in the bankruptcy court auction were a group of debt holders called Cobalt Video Holdco. Another bidder, SK Telecom, dropped out after two rounds of bids. An expected joint bid by two liquidation firms, Gordon Brothers Group and Hilco Merchant Resources, did not materialize.
There were several rounds of bidding at the U.S. Bankruptcy Court of New York on Tuesday before the courthouse closed for the day. The auction continued at law firm Cadwalader Wickersham & Taft, where the proceeding was closed to the public.