Blockbuster Looks At Circuit City's Books; Ditches Acquisition Offer

from the no-real-surprise dept

Wed, Jul 2nd 2008 5:28pm — Mike Masnick

We were one of a very small number of people who actually saw some logic behind Blockbuster bidding for Circuit City -- though, it seemed unlikely that Blockbuster viewed the purchase in the same way we did. Most people assumed (probably correctly) that Blockbuster didn't really have much of a plan at all, other than to merge the two struggling companies and have an even bigger mess on their hands. Blockbuster has now withdrawn the offer to buy Circuit City, gamely claiming that it has to do with "market conditions" and a better understanding of just how awful Circuit City's books appear to be. That's press release talk. What's more likely is that Blockbuster realized that everyone was right: it would screw up the merger and make a bad situation worse.

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Filed Under: mergers, retail
Companies: blockbuster, circuit city

8 Comments

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Lucretious, 2 Jul 2008 @ 5:54pm

It would suck to see Circuit City go under. I like their stores far better than Best Buy.
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nonuser, 2 Jul 2008 @ 6:32pm

really didn't make any sense
I could see where they might do some hand wringing about not being able to sell the TV sets and game consoles, but that is just a completely different business with little overlap in expertise. And with Circuit City being hit by the triple whammy of the recession, weak dollar vis supplier countries, and rising fuel prices for transportation, the timing is bad as well.

Blockbuster does have a nice niche, that is group media shopping by dormmates and apartment mates in their 20's and 30's. One obvious area for extension would be audio recordings, but of course that whole industry has pretty much gone kaput. Maybe they should sell used CD's for below $10, that would have the low cost, opportunistic shopping aspect that fits in with the rest of their experience.
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Tray, 2 Jul 2008 @ 6:33pm

Corporate Culture = Failure
It's NOT the stores that are causing problems - it's the mid & upper management who have absolutely no clue. I worked at a retail location in slidell, la for about 1 year in which time I saw some of the most ignorant and incompetent management. From the district manager, to the store & ops manager, to sales managers, they had no clue on how to handle employee morale, customer satisfaction, and general common sense on how to "just handle things". If there sacred circuit city manual didn't tell them what to do they would often be at a complete loss. The promotion structure is archaic at best - those with the most "time in" get promoted. Which clearly failed - as the store manager could barely iron his shirt, much less deal with customers problems - his attitude was simple that if you had a problem, it was YOUR problem, not ours. So its no surprise to see this news - its the result of poorly executed management decisions at all levels - thus poorly performing employees. I'm very happy I left as I now work as a GM for a mid-size business, if anything I learned what NOT to do as a manager.

I sort of predict both CC and BB "consolidating", i.e closing, stores before to long. I know people like to "touch, feel, and talk" to real human beings - but why would I buy my 60' Sony Wega from CC for 4 or 5 grand, when I can get the same one, same warranty, etc. from a authorized dealer online for half the price ... I won't! Most informed consumers don't shop in these stores for big ticket, aka high profit margin, items - I see these places as a super radioshack.
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Michael Setzer, 2 Jul 2008 @ 7:06pm

Why?
I couldn't see why Blockbuster wanted Circuit City in the first place. One's a video rental store and the other's an electronics retailer. Where's the synergy? Where's the complimentary business?
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Anonymous Coward, 2 Jul 2008 @ 9:05pm

The "logic" of BB buying out CC went out the door about two months ago when just maintaining what you have (even struggling) is more important to stock holders than taking a chance. The economic market is in poor shape and stock holders are demanding conservative decisions.

More than anything else, this just seems like a scared reaction to the current market instead of actually trying to build a lasting buisness.
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johnny, 3 Jul 2008 @ 5:19am

I think that
"Crazy" Eddie Antar might be interested!!!
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Anonymous Coward, 3 Jul 2008 @ 5:30am

Re: Corporate Culture = Failure
Their profit margins are rather low. They deal with value not price. Hey, techdirt nerds, you don't know as much about business as you think you do.
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Glenn Charles, 3 Jul 2008 @ 4:56pm

Infinite or intangible goods
It's not a good example, but; what are your reactions when I pose as the local computer gear guru on the strength of Techdirt writings? I mean, I have a lot of people fooled here now.

(Actually, if I get bullied into giving advice or whatever I just blame it on you. Still, the question is valid.)
--Glenn
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