"So why make an offer now? I see two drivers. First, Hollywood Entertainment has an existing buyout plan to take the company private at about $10.25 per share, making time of the essence for a move. Second is a protection of its bricks-and-mortar business. Blockbuster's model is changing, but unlike Netflix or Amazon, its network gives it the ability to build in-store pick-up into its subscription model. For people who still wish to take advantage of a spur-of-the-moment video selection, this remains a differentiator. But this only works if the network of stores doesn't become a financial albatross around the company's neck. Management determined that its best move, then, was to eliminate some of the competitive forces that Hollywood Video stores cause. In other words, this $11.50 bid by Blockbuster isn't necessarily an indication of the value of Hollywood Entertainment as a stand-alone company, but rather the price that Blockbuster is willing to pay not to worry about it as a competitor anymore."
Blockbuster buying Hollywood Video would make me sad. I rely on my local Hollywood Video store for many of my classic, independent, and foreign rentals which are still available only on VHS. The last time I was in a Blockbuster, there was a foot of empty space between the videos on its shelves in the non-new-releases sections.
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