Blockbuster Canada to close remaining stores

Blockbuster Canada's receiver wants a court order to shut down the movie rental company's 253 remaining retail locations, saying it can't find a buyer.
A court hearing to consider the closing is scheduled for Tuesday. The DVD-rental business has been limping toward the exit, as consumers opt more and more for downloaded digital entertainment. (Canadian Press)

Blockbuster Canada's remaining stores are set to close soon, and hundreds of retail jobs at the national movie rental chain are about to disappear, victims of the digital movie revolution.

The receiver in charge of selling Blockbuster Canada wants a court order to shut down the movie rental company's 253 remaining retail locations, saying Wednesday it had been unable to find a buyer willing to invest in the business.

Each Blockbuster store employs an average of 10 people, meaning about 2,500 people could be out of work. An estimated 1,400 people lost their jobs during the first round of store closures earlier this summer.

About 150 Blockbuster Canada stores were closed in June, as it grappled with a shift to digital downloads, a tepid economy and new ownership of the U.S. Blockbuster chain which left the Canadian chain in debt.

"As a result of the significant changes in Blockbuster Canada Co.'s competitive landscape, the company's 'bricks and mortar' business model has experienced significant challenges over the last few years, largely due to the proliferation of various alternatives available to media consumers in Canada," the receiver said in a statement issued late Wednesday.

The receiver said Wednesday the closure process should begin in the next few days, and existing gift cards and rewards programs will no longer be accepted.

A court hearing to consider the full-out closure is scheduled for next Tuesday.

No liquidation plans outlined

There were long lines at stores set to be shuttered when the first round of liquidation sales began in June, with customers stripping the shelves bare in only a few hours as they bought stacks of $4 DVDs.

Wednesday's statement from the receiver did not outline liquidation plans.

The receiver said it has tried to sell the company, but was unable to reach a deal with a buyer that was willing to make the necessary investments to keep the business going.

Blockbuster Canada was placed into receivership by an Ontario court in May in the face of US$70 million in claims from various movie distributors, including Hollywood studios that provide its DVDs, and other suppliers.

The Canadian operations had acted as a guarantor for Blockbuster's U.S. business, which went into bankruptcy protection in September and was later auctioned off for $320 million US to American satellite TV provider Dish Network Corp.. Dish did not buy Blockbuster Canada, which was left to pay the bills. Dish shares closed 6.5 per cent higher on the Nasdaq Wednesday at $24.86 US.


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Earlier this month, a New York court delayed a hearing that would have decided whether Blockbuster Canada could legally use the brand name as it went through receivership.

Struggled to stay relevant

The new owner of Blockbuster USA had said it did not want the Canadian retailer to use the name, while Blockbuster Canada argued it had paid fees for that right. Blockbuster stores had operated in Canada for 21 years.

The receiver in charge of selling Blockbuster Canada had argued that stripping the chain of that right would "devastate" its business.

Blockbuster Canada had been struggling to stay relevant in a time of increasing digital movie downloads.

U.K.-based HMV, once a top music retailer, sold off its Canadian arm in June to Hilco, a company that agreed to invest up to $25 million to fund the evolution of the national music, video and game retailer as it adjusts to the new world of digital entertainment. HMV was drowning in debt and needed to sell off HMV Canada to pay its bills.

HMV Canada had recently been boosting its offerings to focus on a broader selection of music and film-related products, including T-shirts, headphones, video game controllers, mobile phones and other electronics, in an effort to curb declining revenues as disc sales weaken and more shoppers opt for downloads.