Blockbuster continues to remain an upscale chain in Mexico with $31M sale- report
Blockbuster will continue to live on in Mexico as an upscale chain that plans to offer everything from television to banking services even as the last US store ceased operations this month, Bloomberg reported.
Blockbuster owner Dish Network Corp agreed to divest the chain's stores in Mexico in a $31 million deal to Grupo Elektra SAB after coming to a decision to shutter its US outlets in November. Billionaire Ricardo Salinas controls Grupo Elektra, a retail and financial firm, the report said.
Banco Ve Por Mas Analyst Juan Elizalde told Bloomberg that the Blockbuster brand has more elegance in Mexico, with majority of its outlets found in wealthier neighborhoods. Despite the availability of pirated DVDs sold by street vendors, movies and video games rentals are still viewed as feasible business operations. Elizade added that Blockbuster Mexico continues to have a good reputation, compared to the image of its US chain, and this could be leveraged to Elektra for a more ambitious undertaking, the report said.
In a phone interview, Elizalde told the news agency, "They're seeing potential in the client base and the value of the brand. The stores in Mexico haven't had the same problems. They still generate cash flow. It's attractive."
As a result of the deal, Elektra will gain 300 locations and 1.6 million Blockbuster members. For the first three quarters of last year, Blockbuster Mexico was able to post a gain of $117.7 million for Dish or an increase of over 3% from the same period the year before. This comprised 1% of the revenue of Dish and would represent total sales of around 3% for Elektra, the report said.
The Mexico City-based firm said the acquisition gives Elektra a new avenue to offer electronics and financial services like online banking. It could also utilize Blockbuster for the promotion of the original video content of TV Azteca and the pay-per-view movie system called Totalmovie, the report said.