In its most recent annual report filing with the Securities and Exchange Commission (SEC), Blockbuster Inc. spells out a potentially dire forecast for its future should the company fail to meet loan obligations, including bankruptcy, which could possibly affect its ticketing deal with partner Live Nation.
The concern is due to Live Nation’s three-year deal with Blockbuster for the giant movie rental chain to be the bricks-and-mortar storefront for Live Nation’s ticket-selling operation. The two companies formed the partnership just prior to Live Nation launching its new ticketing operation in January, and the terms call for Live Nation to exclusively sell tickets at-retail through 500 strategically situated Blockbuster outlets across the country.
While there is no official indication that Blockbuster will indeed file for bankruptcy, the company states in its 10-K document filed with the SEC Monday, April 6, that the situation is serious.
What a potential bankruptcy filing could mean to the Live Nation deal is anyone’s guess. What would happen to tickets issued at Blockbuster outlets if the company filed for bankruptcy? Would bankruptcy necessarily mean all outlets would close down? Would concert ticket sales be adversely affected? Is this situation placing added pressure on Live Nation to get its merger with Ticketmaster approved by federal regulators?
TicketNews posed these questions to a Live Nation spokesperson, but did not receive any responses.
“Our future viability is dependent on our ability to execute these plans successfully or otherwise address our liquidity shortfall. If we fail to do so for any reason, we would not have adequate liquidity to fund our operations, would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code,” Blockbuster stated in the document.
The company is in the midst of restructuring certain debt obligations with lenders, and it hopes to be pointed in a more positive direction next month. As of early January, Blockbuster was carrying more than $780 million in debt, but stands to have that amount significantly reduced under the restructuring plans.
“While we believe that all such conditions will be met and that we will be in a position to close on the amended credit facility on or about May 11, 2009, there can be no assurance regarding these matters,” Blockbuster said in the document. “The risk that we may not successfully complete this refinancing and obtain the related amendment of certain financial covenants included therein, and/or the risk that we may not have adequate liquidity to fund our operations as a result of not meeting our projected financial results, even if the refinancing is completed within the time and upon the terms contemplated, raise substantial doubt about our ability to continue as a going concern.”
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They won’t give discounts on the tickets and many people don’t like walmart! Not because of there “low price” or anything. Its the way they conduct business.
The line in BBI’s 10K that there is risk in BBI’s ability to continue as a going concern was already announced a month ago, and was a condition for lenders to amend loan terms. This news really represents nothing new, has no bearing on BBI’s outlook, nor should it change BBI’s plans. The simple fact is that the warning is scaring people, even though it was previously announced and put in there by creditors.
This article is now just fueling speculation.
Wait until Walmart starts selling tickets….
I’m not a LN hater like a lot of other people on here, but it IS a bonehead idea to rely on a retailer with poor financials like Blockbuster to serve as your storefront.
Desperate people do desperate things
Looks like another nail in the merger coffin
The Blockbuster bankruptcy possibility is not new, and the WSJ article this morning made a material ommission. INvestors should note that BBI received a reprieve via the fact that in restructuring its $350M revolver. The agreement lowered the debt to $250M and also removed any bankruptcy triggers regarding a going concern qualification.
Realistically speaking, did anyone actually think the LYV BBI deal made a difference? I mean come on, people do not buy tickets in retail outlets anymore. Just look at Stubhub and the new functionality allowing the sale of electronic tickets. Deals with brick and mortar retailers are so last century.
Why? If Blockbuster fails, LN will not have a retail outlet for it’s attempts at it’s own ticketing company. That’s a stronger argument that it’s not a ticketing company in itself, so not a competitor to TM, so the merger would not be eliminating competition in ticketing, so no reason to block it.