300 Blockbuster US stores closing down, 3,000 jobs to be cut

Written on:January 22, 2013
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Blockbuster store closing

Blockbuster failed to withstand competition from Netflix and Lovefilm

300 Blockbuster stores in the US will be closing down in the coming few weeks as Dish Network, the owner of the DVD retailer, has decided to do away with the loss-making units, in turn laying off 3,000 employees. The move comes almost a year after Dish Network closed down 500 Blockbuster stores in February 2012.

Following the store closures, Blockbuster will be left with 500 movie rental stores in the US. The announcement regarding the details of stores that would be closing down has not yet been revealed. Colorado-based Dish Network bought the then-bankrupt video rental chain Blockbuster for $320 million in March 2011. Dish Network now plans to move Blockbusters’ headquarters from Texas to Colorado’s Douglas County.

John Hall, a spokesman for parent company Dish Network Corporation, said that some Blockbuster stores were being closed down because they were reaching their end of lease term and others because of their under-performance. Dish Network had hoped to benefit from Blockbuster by using the movie rental chain to market its satellite service. Dish Network, which is a satellite pay-TV provider, wanted to use Blcokbusters’ brand name and online streaming service to compete against the likes of Netflix and Redbox.

The UK arm of Blockbuster went into administration last week and its administrator Deloitte confirmed closing down 129 stores from a total of 528 stores, jeopardising 760 jobs. A new development amidst Blockbuster store closures came in the form a report by Guardian in which it has emerged that Blockbuster UK failed to post profits in the last 15 years and paid just £250,000 in corporation tax for the period despite making sales of more than £3.5bn.

Despite its struggle to break into profits for 15 years, Blockbuster UK was charged with £78m in royalties by the parent company in the US for using its brand, IT systems and other franchise rights. Blockbuster UK posted net tax charges of £248,000 on cumulative profits of £37m between 1996 and 2010. Blockbuster is the latest entry to the list of tax evading companies which includes the likes of Starbucks, Google, Amazon.

     

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