Video Rental Leader Considers $100 Million Stock Buyback
Jun. 05, 1991
FORT LAUDERDALE, Fla. (AP) _ Blockbuster Entertainment Corp., the video rental giant that is on the defensive over the future of the video rental industry, said it is considering a $100 million stock buyback.
Stock analysts have grown anxious about the industry's outlook since Cox Communications, Blockbuster's third-largest franchise holder, decided in May to get out of the business and sell its 82 stores. Cox officials said they wanted to stick to their core news media operations.
Blockbuster's stock, which has dropped about 40 percent in value this year, closed Wednesday at $9.875 per share, up 37.5 cents.
''We have the ability to have a share buyback of up to $100 million,'' Blockbuster Treasurer Joseph Burke said Tuesday.
Although no plan to do so has been put in place, the board of directors authorized the executive committee to pursue the idea just before the annual meeting two weeks ago, he said, and the purchase could be made using credit lines and operating funds.
At Blockbuster's current price, $100 million would buy 6.8 percent of the company's stock, or 10.5 million shares.
First-quarter earnings were lower than projected because the Gulf War hurt rentals industrywide.
Company Chairman H. Wayne Huizenga, who owns 12 percent of Blockbuster's stock, has attributed some of the decline in the stock price to investors selling short. He has said technological advances that could harm the industry are overstated.