Last Friday, Blockbuster's higher-ups told Bronx bomber Niko Celentano and his ever-expanding band of shareholders that, well, sorry, but despite their demands for an emergency meeting, that ain't gonna happen. One week later, the shareholders respond to the response. And for the most part, the missive, which appears in full on the other side, is an olive branch extended in the direction of Renaissance Tower in which the shareholders cross their fingers and pray for rain, pointing specifically to the downtown company's Blockbuster on Demand service as the thing that will more than likely "create new revenue streams for the company," which are kinda needed given the $109 million and not a penny more on hand at present.
(Speaking of, also after the jump is a second Blockbuster ad to surface in recent days -- a Droid X teevee spot, actually, but one trumpeting Motorola and Verizon's partnership with the Dallas company.)
But Celentano's missive to CEO Jim Keyes isn't all hugs and kisses:
With all the new and future revenue streams we have mentioned, I would like to share with you some of our concerns. Our biggest concern here would be a bankruptcy filing by the company before ever realizing any of these positive revenue streams and partnerships. With the closing of underperforming stores and over 200M in cost cuts announced for FY 10, we believe the company is in the process of turning a corner and becoming profitable again so a bankruptcy filing should ABSOLUTELY not be necessary.
July 21, 2010
BlockbusterShareholders.com
Niko CelentanoJames W. Keyes
Blockbuster Chairman of the Board and CEO
1201 Elm Street 21st Floor
Dallas, TX 75270Dear Mr. Keyes,
Today as I write you we have grown to over 400 members, representing over 20% of the voting shares of Blockbuster. While we do not agree on the reasons leading up to the failed vote, we do understand that given the ongoing recapitalization negotiations, these issues must be put aside, for now. This is a very critical time for Blockbuster and we do not want to take your attention away from what you are trying to accomplish. Understand, Mr. Keyes, we are obviously not here to hurt the company. This group is made up of members who believe in the brand and its future. We understand and appreciate that the company is in the process of transforming its business model and attempting to clean up its balance sheet.
We are excited to see what we believe will be increased revenue streams over the next few quarters from the many initiatives that are already under way. The 28 day window that has been negotiated should have a positive effect on Q2 same store sales and on other quarters moving forward. We believe that once advertising dollars are spent to educate the consumer of this advantage and as this exclusive release window becomes common knowledge, this truly could be a game changer for the company. The education of consumers to this competitive advantage must continue with full force.
The Movie Gallery liquidation should also have a tremendous effect on same store sales in areas where Blockbuster has competing locations. These customers are already "brick and mortar" friendly and should be courted in every way possible. We realize the Movie Gallery liquidation could have a negative impact on Q2 due to the clearance of merchandise at deep discounts in their stores but we believe these customers they will certainly have a very positive effect on same store sales in Q3.
We believe the kiosk deal with NCR will also start to produce some meaningful revenue by Q4 with 10,000 kiosks in deployment. Going forward these kiosks should start to add some much needed dollars to the bottom line, at very little expense to the company. We would hope these kiosks are being deployed in areas where there are brick and mortar store closings. We understand NCR is interested in further investing in the entertainment business and is interested in additional methods of content distribution. We hope you are able to take full advantage of NCR's enthusiasm and strong relationship with Blockbuster to expand your partnership in ways most beneficial to the long term success of the Blockbuster brand.
The emerging business that has us most excited is Video on Demand. We understand Blockbuster intends to be on over 150 devices by the end of the year. With 75 devices currently including a Blockbuster application, this will mean we will double the amount of Blockbuster included devices by the end of this year. Motorola's Droid X on Verizon has already created a lot of excitement for the Blockbuster brand and we know this will create new revenue streams for the company. We are also looking forward to the cable and satellite partnership(s) you have mentioned and the additional revenue stream(s) it/they may offer.With all the new and future revenue streams we have mentioned, I would like to share with you some of our concerns. Our biggest concern here would be a bankruptcy filing by the company before ever realizing any of these positive revenue streams and partnerships. With the closing of underperforming stores and over 200M in cost cuts announced for FY 10, we believe the company is in the process of turning a corner and becoming profitable again so a bankruptcy filing should ABSOLUTELY not be necessary.
Another concern we have pertains to the ongoing recapitalization negotiations under way with the bondholders. While we understand the bondholders would want most of the company in exchange for their debt, we believe this would be selling the company short. We hope you and the board are conducting your fiduciary responsibilities and making sure that all deals are in the best interests of all stakeholders including common shareholders. We want to make sure the common shareholders' interests are taken into proper consideration when you are negotiating any deals with other stakeholders. We hope, once you complete a successful out of court recapitalization, to help you in whatever way we can to make Blockbuster the leader once again in the home entertainment industry. Our group has professionals from all walks of life, including the entertainment industry, who have a passionate desire to see Blockbuster win again. We are looking forward to a strong relationship with an open line of communication with Blockbuster's management team and the board.
Sincerely Yours,
Niko Celentano
