Restructuring firm GA Europe, which was brought in by PwC to co-ordinate the closure of camera chain Jessops, reportedly has an interest in Blockbuster UK and would keep some shops open.
“GA bosses are understood to believe they can successfully run a rump Blockbuster business in the UK,” Retail Week said. It also reported that Dish Network, which bought the US Blockbuster and its subsidiaries in 2011 is “thought to be in discussions about buying back parts of the business”.
Deloitte announced that 160 of the 528 video rental chain’s outlets would close but Retail Week reports that GA Europe, which oversaw the closure of 100 Blockbuster stores in Italy last year, has had an interest in the UK firm for some time.
Meanwhile, a Dish Network representative confirmed to Home Media Magazine that it will close 300 of its US stores, about 35% of its total due to expired leases and lack of performance.
Dish picked up Blockbuster US when it went bankrupt in 2011. Home Media said it received an e-mail from Dish spokesman John Hall in which he wrote: “We continue to see value in the Blockbuster brand, and we will continue to analyze store level profitability and — as we have in the past — close unprofitable stores.”
The Guardian newspaper reported that Dish is said to be Blockbuster UK’s largest creditor, reputedly owed £23 million in loans and unpaid royalties. “While royalty bills from the US are understood to have continued after Blockbuster was taken over by Dish in 2011, the satellite broadcaster is believed to have refrained from collecting on these sums owing,” the paper said.
The Guardian also published an analysis of the accounts of Blockbuster UK that it said showed the firm delivered less than £250,000 in corporation tax over a 15-year spell in which it made sales of more than £3.5 billion.
The Guardian said: “Over the last 15 years for which accounts are available, Blockbuster’s UK operation struggled to consistently break into profit but the British offshoot was nevertheless charged almost £78 millio in royalties – for use of the Blockbuster brand, IT systems and other franchise rights – by its then parent Blockbuster Inc. Between 1996 and 2010 the business posted net tax charges of £248,000 on cumulative profits of £37 million.
One tax specialist told the newspaper that while Blockbuster UK’s royalty payments of about £5 million a year undoubtedly reduced the group’s tax bill in Britain, “it does not necessarily follow that the arrangement lowered the overall group’s tax bill”. – By Ray Bennett
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