Bad Review: Blockbuster Video Revs Plummet

BlockbusterTough economic times are hitting home-entertainment providers, too. Blockbuster Video said fourth-quarter fiscal revenues were $1.38 billion, compared with total revenues of $1.57 billion for the same period one year ago.

The movie rental company reported gross profits for the fourth quarter of $682.3 million--over $100 million less than the $797.1 million in the same period one year ago.

The home video retailer blamed one less week in its 2008 fiscal-year period versus the 53-week period in 2007, as well as the negative impact of foreign currency exchange rates.

Overall, Blockbuster swung to a massive net loss of $359.8 million because of a one-time non-cash charge of $435.0 million, writing down the value of its assets and goodwill. This compared to positive, net-income result of $41.0 million in the fourth quarter of 2007.

Better news was that Blockbuster's domestic same-store revenues moved up 6.4%, with same-store retail revenues improving 37.4%. The company says domestic rental and retail numbers showed positive results for the first time in eight years.

Cash flow was higher for the fourth quarter and year-to-year. Blockbuster's fiscal-year 2008 earnings before interest depreciation and amortization (EBITBA) saw a 77.3% increase to $319.1 million.

Blockbuster noted that its total domestic ad spend for the fourth quarter was $18.3 million--lower than the $22.7 million in the fourth quarter of 2007. For the year overall, Blockbuster cut domestic ad spending almost in half: to $85.9 million from $150.5 million in 2007.

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