Blockbuster makes a bid for its rental rival

DALLAS (AP) -- Blockbuster Inc., facing new attacks from big retailers and online operators, has offered $700 million for rival Hollywood Entertainment Corp. in a bid to combine the two biggest players in the movie-rental industry.
Blockbuster, the biggest in movie rentals, said Thursday that it had communicated its interest to No. 2 Hollywood Entertainment but that there have been no substantive talks on terms of a deal.
Hollywood Entertainment is already in a deal to let its chairman and chief executive and a buyout firm take the company private. The agreement, however, allowed Hollywood to solicit other bids.
The deal would give Blockbuster, which already has 9,000 outlets worldwide, more than 1,920 Hollywood Video stores and 600 Game Crazy specialty stores.
In 1999, a plan by the two companies to rename Hollywood stores under the Blockbuster banner was stopped by the Federal Trade Commission, but analysts say a merger of the two largest movie-rental firms stands a better chance now.
Stacey Widlitz, an analyst for Fulcrum Global Partners, said regulators would probably block Blockbuster's plans if they considered the movie-rental business as a distinct industry, but not if they lumped rentals with retail sales of DVDs and games. Widlitz said the combined company would control about half the U.S. rental business but only about 20 percent of rentals plus retail sales.