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Blockbuster Video-Rental Chain Will Shut All U.S. Stores

Photographer: Jin Lee/Bloomberg

A file photo shows a Blockbuster Inc. store in New York, in Sept. 2010. Blockbuster will close its remaining U.S. stores. Close

A file photo shows a Blockbuster Inc. store in New York, in Sept. 2010. Blockbuster... Read More

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Photographer: Jin Lee/Bloomberg

A file photo shows a Blockbuster Inc. store in New York, in Sept. 2010. Blockbuster will close its remaining U.S. stores.

Blockbuster LLC, the video-rental company owned by Dish Network Corp. (DISH), will close its remaining 300 U.S. stores, ending an era for a chain that was once a ubiquitous part of American shopping centers.

Blockbuster will shut the outlets by early January and discontinue its DVD-by-mail service by mid-December, Englewood, Colorado-based Dish said today in a statement. Each Blockbuster store has eight to 10 employees, so the move is expected to cost about 2,800 jobs. Dish will keep the licensing rights to the Blockbuster brand and use it to sell other services.

“People were waiting for the death knell for that business for many years,” said Matthew Harrigan, an analyst at Wunderlich Securities Inc. “With everything happening on the digital distribution side, it has been long overdue.”

Dish, which acquired the chain out of bankruptcy in April 2011, had already divested Blockbuster’s international assets, including operations in the U.K. and Scandinavia. The company has been gradually shutting down the 1,700 stores it acquired.

“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish Chief Executive Officer Joseph Clayton said in today’s statement. “We continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.”

Blockbuster was once so dominant in the home-video market that it was sued by independent video retailers, which claimed in 2001 that the company’s revenue-sharing agreements with movie studios hurt competition. The lawsuit was later dismissed.

Netflix Streaming

When the company was spun off by Viacom Inc. (VIAB) in 2004, it operated about 9,000 locations -- before streaming video services such as Netflix Inc. (NFLX) devastated the industry. Blockbuster filed for bankruptcy protection in September 2010.

Dish took over Blockbuster the following year, aiming to use the stores to sell mobile devices that could stream Blockbuster movies. The plans broke down when U.S. regulators didn’t immediately approve a waiver allowing Dish to use its satellite spectrum for terrestrial data and voice transmission.

The Blockbuster brand will continue at Dish through the Blockbuster @Home and Blockbuster on Demand options, which stream movies and videos to televisions, computers and other devices, Dish said.

Dish shares were little changed today in New York, closing at $48.84. The stock has risen 34 percent this year.

While the demise of the Blockbuster chain is symbolic for the industry, it won’t have a big impact on Dish’s prospects, Harrigan said.

“It’s certainly an end-of-an-era type thing, but in terms of that affecting Dish’s stock, it doesn’t have any particular importance,” he said.

To contact the reporter on this story: Alex Barinka in New York at abarinka2@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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