M&E Daily

Redbox To Acquire NCR’s Rival Kiosk Business, ‘Blockbuster Express’ Out of the Picture

The Blockbuster brand name is poised to disappear from some 9,000 DVD rental kiosks in the U.S., as Coinstar’s Redbox plans to acquire the machines in a deal with NCR Corp. announced Monday.

NCR and Redbox made no reference to the “Blockbuster Express” name in announcing their acquisition agreement, which carries a value of up to $100 million and is expected to close in the third quarter of 2012.

For Redbox, the deal will eliminate one of its biggest competitors from the DVD rental market — at the same time that the company makes a foray into streaming video services in a separate venture with Verizon. The company already operates more than 35,000 kiosks in the U.S.

NCR had fought to retain the Blockbuster brand for its kiosks last year, even as the brick-and-mortar chain of Blockbuster stores restructured under the new ownership of Dish Network Corp. In May 2011, NCR filed a lawsuit asking a Delaware federal court to declare that the BB 2009 Trust — the owner of the Blockbuster Express name, design, and related trademarks — did not have the right to terminate its licensing agreement with NCR after Dish acquired an interest in the trust from Blockbuster.

NCR evidently settled the litigation in advance of signing the Redbox deal. “This deal is with Coinstar [and] Redbox — and as we complete this transaction and we exit the owner-operated part of the business, that [will] terminate…the branding relationship that we have with Dish and Blockbuster,” said Bob Fishman, NCR’s chief financial officer, during the company’s earnings call with analysts on Monday.

Asked by an analyst whether the litigation against the BB 2009 Trust would be taken over by Redbox, Bill Nuti, NCR chief executive, responded, “No. It doesn’t exist. It’s gone. It’s over.”

Redbox will purchase rental kiosks, certain retailer contracts, and DVD inventory from NCR’s entertainment division. In connection with the asset purchases, Redbox parent Coinstar and NCR also will enter into a strategic supplier arrangement under which Coinstar will purchase products and services from NCR.

NCR’s entertainment business earned $163 million in revenue during the company’s fiscal 2011, a 60 percent increase over the previous year.