As expected, Blockbuster has been auctioned off. Dish Network Corporation has announced that it was selected as the winning bidder in the bankruptcy court auction for substantially all of the assets of Blockbuster.

The winning bid was valued at approximately $320 million, but after certain adjustments are made at closing of the transaction, including adjustments for available cash and inventory, Dish expects to pay approximately $228 million in cash to acquire Blockbuster. The closing of the transaction is expected to occur in the second quarter of 2011.

Dish, led by satellite billionaire Charlie Ergen, beat out at least three other bidders, including billionaire investor Carl Icahn, and South Korea's SK Telecom. Dish might use Blockbuster's online content as a base for an online product to deliver movies, but competition is only getting tougher in this space.

Blockbuster was once the world's largest video chain with a market cap of more than $5 billion at its peak in 2002. It started to fall apart after pressure from mail-order and digital competitors such as Netflix.

In September 2010, Blockbuster filed for Chapter 11 bankruptcy protection in the US. Two months ago, Blockbuster asked the New York bankruptcy court overseeing its Chapter 11 case to allow it to conduct an auction for the company. The company decided to put itself up for sale after a reorganization plan fell apart late last year.

"With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for DISH Network," Tom Cullen, executive vice president of Sales, Marketing, and Programming for DISH Network, said in a statement. "While Blockbuster's business faces significant challenges, we look forward to working with its employees to re-establish Blockbuster's brand as a leader in video entertainment."