Back to top

Analyst Blog

Dish Network Corp. (DISH - Analyst Report), the second largest satellite TV operator in the U.S. is planning to close about 300 stores of its subsidiary Blockbuster Inc, retrenching about 3000 employees in the process. Reducing the store count is part of the company’s plan to make the business profitable.

The stores, which will be closed in the coming weeks are either underperforming or almost on the verge of their lease terms. Trimming down the store count will bring the total number of Blockbuster stores in the country to 500 locations. However, the company did not disclose the store locations that will be shutting its operations. 

Dish Network acquired Blockbuster Inc. on May 2, 2011 for $320 million. The acquisition enabled Dish Network to offer several movie streaming services over the Internet, thus efficiently countering the competitive threats from cheap online movie distribution companies like Netflix Inc. (NFLX - Analyst Report), Amazon.com Inc. (AMZN - Analyst Report), Hulu among others.

When Dish acquired Blockbuster, the video rental company had about 1700 stores across the US. But ever since its takeover, the company has been battered by stiff competition from other video streaming companies providing cheaper movie download options and was forced to close down 500 stores last year.

The UK subsidiary of Blockbuster is also struggling amid competition from supermarket chains like Tesco and download sites like Apple Inc.’s (AAPL - Analyst Report) iTunes. The company is set to close 129 stores of its 528 stores and will downsize its employee strength by 760 over the coming weeks. The 129 store closures are in addition to the 31 store closures declared earlier.

Our Take

The video rental company declared that more stores could be closed as part of the company’s strategy to restructure its operations by closing the unprofitable stores. However, we believe that closing the Blockbuster stores won’t allow the company to vend off competition from movie distribution companies. Dish Network needs to come up with a cost-effective and convenient plan of renting DVDs like Redbox, which rents DVD through retail kiosks.  

We currently, maintain a Zacks Rank #3 (Hold) on Dish Network Corp.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%