Report: Blockbuster wants Movielink

By DAVID KOENIG

DALLAS

Blockbuster Inc. is in advanced talks to buy Movielink LLC as a way to speed its entry into the online movie-downloading business, according to people familiar with the situation.

Movie-rental giant Blockbuster would pay less than $50 million in cash and stock for Movielink, which is owned by five major studios, according to one of those who spoke on condition of anonymity because the deal is not final.

The companies declined to make official comment.

Movielink has offered movie downloads since 2002. Recent competitors include Apple Inc.'s iTunes and Wal-Mart Stores Inc.

John Antioco, Blockbuster's chairman and chief executive, has been hinting that the company would get into the digital-download business in 2007. Rival Netflix Inc. launched a movie-download service in January.

Netflix got a big head start on Blockbuster in the online rental of DVDs that are delivered by mail, and Dallas-based Blockbuster hopes to avoid chasing its rival in the young download business.

On Tuesday, when Blockbuster announced its latest quarterly financial results, officials said they expected to make an announcement soon about a video-downloading deal.

Antioco told investors recently that the company needed to be in the download business. But Blockbuster, which spent heavily to launch an online service in 2004 and to drop most late fees in early 2005, didn't want to build a download offering from scratch.

"We think we need to be in this business. We don't see the digital downloading, the electronic sell-through or the pay-per-view piece becoming a huge business in the next year to two, but clearly it will become a $1 billion-plus business five years out," Antioco said. "Plus, we do not want to be at a competitive disadvantage to anybody."

Movielink is based in Santa Monica, Calif., and owned by Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. Studios. It offers downloads of movies from the vaults of those studios plus Walt Disney Pictures, Miramax and others.

The management and technical staff of Movielink are expected to remain in place.

Blockbuster shares rose 17 cents to close at $6.75 in trading on the New York Stock Exchange.