An employee walks into a Blockbuster store, Monday, April 14, 2008, in Dallas. Blockbuster Inc. said Monday it has offered to pay more than $1 billion for struggling Circuit City Stores Inc., but the nation's second biggest consumer electronics chain questioned whether the movie-rental company can finance the deal. (AP Photo/Matt Slocum)
Under a three-year agreement announced Tuesday, Blockbuster's stores next month will become the primary brick-and-mortar sales outlet for music concerts staged by promoter Live Nation Inc. in the United States.
Dallas-based Blockbuster will supplant a hodgepodge of department stores, supermarkets and other retailers that Live Nation had been relying upon as part of an unraveling partnership with Ticketmaster Entertainment Inc.
Beverly Hills-based Live Nation is breaking away from Ticketmaster to build its own ticketing channel. Ticketmaster will continue to handle some of Live Nation's sales until contracts covering several concert venues expire.
With most consumers buying their tickets online, Blockbuster is expected to account for less than 10 percent of the more than 10 million tickets that Live Nation anticipates selling in the United States next year.
Still, the Live Nation relationship will provide Blockbuster with a new way to lure people into its stores as more consumers rent movies through DVD-by-mail vendors like Netflix Inc. or buy entertainment through Internet downloading services and "on-demand" features bundled into cable-television subscriptions.
"This is another step in the right direction," said James Keyes, Blockbuster's chief executive. "It helps reinforce what Blockbuster really is trying to do — provide the most convenient access to entertainment and media."
Keyes, a former CEO for 7-Eleven Inc., has been trying to lessen Blockbuster's dependence on in-store video rentals by emphasizing more sales of movies, games and DVD players. Last week, Blockbuster also expanded its digital business by unveiling a TV set-top box that stores video rentals piped over high-speed Internet connections.
Now that it's hooking up with Live Nation, Blockbuster hopes to piggyback on the ticket sales to peddle more CDs and licensed merchandise connected to the featured performers. Blockbuster will also get a slice of the transaction fee charged on the ticket sales.
Blockbuster's diversification has helped increase its store's sales so far this year, although the company is still losing money — a factor that has further depressed its long-slumping stock. Blockbuster dropped 17 cents Monday to close at $1.02.
Live Nation is faring better. The company earned $105.8 million on revenue of $3.25 billion through the first nine months of this year. But its shares dropped $1.05, or 21.5 percent, to $3.84 on Monday amid a broad market swoon.