Unsurprisingly, the struggling Blockbuster movie rental empire has filed for Chapter 11 bankruptcy protection in the United States, nearly 25 years after it opened its first store. The once-mighty video rental chain won't be, however, closing its 3,000 remaining stores, DVD vending kiosks, by-mail, or digital services, yet. It has struck a deal with its bondholders for a refinancing plan; more than 80 percent of its secured creditors gave their approval. Under the plan, Blockbuster's debt would be reduced 11-fold.
The company is trying to figure out how to get rid of its $1.46 billion debt through a restructuring deal that will leave studios like 20th Century Fox, Warner Home Video and Sony Pictures high and dry, according to Bloomberg. The deal also involves a $125 million loan to help keep its stores running; Hollywood execs may not like it, but keeping Blockbuster afloat is important to making sure competitors like Netflix don't get too popular.
Blockbuster simply couldn't compete with Netflix's mail DVD subscriptions and eventually had to raise its prices. The chain still has its Blockbuster On Demand streaming service and its NCR-operated Blockbuster Express kiosks to lean on, but it's going to be an uphill battle.