Leading South Korean operator SK Telecom is rumored to be interested in bidding for the bankrupt US video rental chain Blockbuster. According to Financial Times report, SK executives regard the move as “crucial” in the company’s efforts to strengthen its content development.
Blockbuster filed for Chapter 11 in US Bankruptcy Court in September 2010 in an effort to reorganize its massive $1 billion debt load for its US operations. The company’s plan is to recapitalize its balance sheet and take the indebtedness down to around $100 million or less when implemented.
As far as customers are concerned, it’s “business as usual” with all of Blockbuster’s US operations working regular hours, including around 3,000 stores, DVD vending kiosks, by-mail and digital businesses.
Some analysts are obviously questioning the logic of this still hypothetical deal, seeing no apparent synergies between the two businesses. I would have to say I agree with this point of view and would find more sense in SK Telecom acquiring a bunch of smaller mobile app and service developers to strengthen their content development business. What do you think?