Blockbuster, Backed by Dish Network, Challenges Netflix

Read the companion article from Blockbuster Looks to Bust Netflix.

TOM HUDSON: It was one year ago this month that movie rental company Blockbuster went bust. Its brick and mortar business was up ended by DVDs through the mail and over the Internet strategy of Netflix (NASDAQ: NFLX). That brings us to tonight`s “Word on the Street,” revenge. Jeanine Poggi is a reporter at and she joins us once again. So how could Blockbuster extract revenge on Netflix (NASDAQ: NFLX) a year after it fell into bankruptcy?

JEANINE POGGI, REPORTER, THESTREET.COM: You know, it`s a big surprise, buy you really have to credit to Dish Network, which purchased Blockbuster out of bankruptcy in April and it`s evolving the company and taking it to a new level, giving to it what should have really been done years ago and now we`re seeing that. It looks like Blockbuster is going to launch its own streaming video service. So that`s really going to be the first competition Netflix (NASDAQ: NFLX) will really face.

HUDSON: Let`s talk about the vulnerability of Netflix (NASDAQ: NFLX). It did announce a very unpopular fee increase earlier this year. We`ll take a look at the chart of Netflix (NASDAQ: NFLX) and see that it has been well off its high, certainly with the market sell off. But then additionally last week, announced that it won`t have the Starz movie content likely to begin in the first quarter of next year. How vulnerable is it?

POGGI: Netflix (NASDAQ: NFLX) is very vulnerable. But it`s six months away that they will lose the content. It`s very likely that they can still strike a deal with Starz. But nonetheless, even if the deal is struck, it really puts Netflix (NASDAQ: NFLX) in a new position. Netflix (NASDAQ: NFLX) no longer holds all the cards and it either needs to pay more for content or accept less content. At this point, we`ve seen an outcry from consumers. They`re not willing to accept less. If the deal isn`t struck, it`s even worse. Starz is really a dominant player for new content and Netflix (NASDAQ: NFLX) rival is really lacking that content.

HUDSON: So turn this around here for Dish Network which owns Blockbuster. How does it fit into the strategy for a company that most still see as a satellite distribution company.

POGGI: (INAUDIBLE) at Dish Network is really repositioning the brand from a satellite company which is costlier to maintain to really a video service company and Blockbuster clearly fits right in there. That brand cache really brings it to the new level and puts it in prime position with Netflix (NASDAQ: NFLX). On top of this it looks like Dish Network may be potentially a bidder for Hulu. So this will take the streaming to a whole another level. And it`s clear that Egan (ph) is really going on this track with several acquisitions in wireless and broadband in the next couple of years. So it`s really positioning itself to compete.

HUDSON: Real quick do you have any positions in Netflix (NASDAQ: NFLX)? Could you own Netflix (NASDAQ: NFLX)?

POGGI: No position on the stock.

HUDSON: You can read Jeanine`s article at the, a link to it on our website as well, Blockbuster`s revenge on Netflix (NASDAQ: NFLX). It`s our guest with “Word on the “Street, Jeanine Poggi.

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