Filed under: Deals, Launches, Viacom (VIA), Blockbuster Inc ‘A’ (BBI), Circuit City Stores (CC)
Blockbuster (NYSE: BBI) must want to own a piece of everything. First, it made a bid for Circuit City (NYSE: CC) and now it is trying to get a piece of the new pay TV channel being launched by Viacom (NYSE: VIA).
Viacom states it will start a TV network with movies and other video content with contributions from MGM and Lions Gate (NYSE: LGF). The channel will compete with HBO and Showtime.
According to The Wall Street Journal, “As part of a deal being discussed, Blockbuster would get digital rights to the new channel’s programming in return for an investment in the partnership.”
How that makes sense is a mystery. The Viacom channel can sell DVDs though a number of outlets. Streaming content over the web does not require help from Blockbuster. How does a company with rental stores and a DVD-by-Internet operation help a pay Television channel which will be distributed by satellite and cable?
Blockbuster has problems of its own. For starters, it just needs to stay in business. Its stock trades at $2.98, near a 52-week low, and down from more than $20 less than five years ago. Putting capital into new ventures or nutty M&A transactions is a waste of shareholder money.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 Letter.
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