Last week, on August 8th, when Blockbuster acquired Movielink, the purchase price for the transaction was widely reported to be a steal at an amount less than $50m and maybe even less than $20m. How low a price, or how much less than those numbers, however, was unclear at the time.
Adding more color and perspective: in July 2006, Movielink’s competitor CinemaNow closed a 5th round (Series E) financing bringing in $20.3m from Cisco, Lionsgate, Transcosmos , Echostar and Index Holdings. The total investment in CinemaNow (including the Series E round) exceeds $40m. CinemaNow and Movielink have similar asset platforms not counting usage metrics.
Additionally, while no numbers on Movielink’s financing history have been released, it’s believed they were capitalized by their movie studio owners with $80 to $100m over their corporate lifespan. (some reports have even set that number as high as $150m)
For $6.6m, Blockbuster bought the assets for pennies on the dollar.