Jolie Rouge
12-14-2004, 10:26 PM
By David Lieberman, USA TODAY
NEW YORK — Faced with growing competition in the home video market, Blockbuster addressed its No. 1 consumer complaint Tuesday, saying it will end late fees on rented videos and games in January.
"It's a very important decision," says CEO John Antioco. "We know that late fees are a reason people don't rent today and have left Blockbuster."
Currently, once a video or game is overdue, Blockbuster charges another full rental fee. After 12 days, it charges the purchase price for the item, plus the late fees. One out of six transactions incurs late fees.
Next month, customers will get one week's grace after the due date to return a DVD, tape or game. After that, the company will assume the customer wants to buy the item, so it will charge the customer for it. If the customer returns that overdue rental within 30 days, the charge will be refunded, minus a $1.25 restocking fee.
Antioco is gambling this will draw enough business at Blockbuster's 4,500 stores to compensate for the lost income, which he pegs at up to $300 million for 2005.
He says he's reasonably confident the net effect will be a wash. "We spent a lot of time and money studying this" in several cities, which Antioco declined to name.
Blockbuster is struggling to keep up with a changing video market. It has lost rentals and sales to discounters selling DVDs. Rivals such as Netflix and Wal-Mart are renting DVDs by subscription via the mail.
Blockbuster told investors that operating income likely will be flat in 2005, before $50 million in extra spending to promote "no late fees." The No. 1 chain, with about 40% of the rental market, is expected to end 2004 with $135 million in net profit on $6 billion in revenue.
"We believe the core rental business will be soft in 2005," he says.
In another matter, Antioco reiterated his interest in buying No. 2 video chain Hollywood Entertainment. He has offered $700 million but refused to accept conditions set by Hollywood's board. Antioco says he hopes Hollywood will talk, but, "We won't rule out appealing to their shareholders directly."
Separately, financier Carl Icahn said in a Securities and Exchange Commission filing that he believes he's now the biggest shareholder in Blockbuster and Hollywood and has told them he favors a merger.
http://www.usatoday.com/money/media/2004-12-14-blockbuster-latefees_x.htm?csp=24&RM_Exclude=Juno
What I want to know if that means that they will "forgive" outstanding laten fees -- I still owe about $6 from 1989 ....
NEW YORK — Faced with growing competition in the home video market, Blockbuster addressed its No. 1 consumer complaint Tuesday, saying it will end late fees on rented videos and games in January.
"It's a very important decision," says CEO John Antioco. "We know that late fees are a reason people don't rent today and have left Blockbuster."
Currently, once a video or game is overdue, Blockbuster charges another full rental fee. After 12 days, it charges the purchase price for the item, plus the late fees. One out of six transactions incurs late fees.
Next month, customers will get one week's grace after the due date to return a DVD, tape or game. After that, the company will assume the customer wants to buy the item, so it will charge the customer for it. If the customer returns that overdue rental within 30 days, the charge will be refunded, minus a $1.25 restocking fee.
Antioco is gambling this will draw enough business at Blockbuster's 4,500 stores to compensate for the lost income, which he pegs at up to $300 million for 2005.
He says he's reasonably confident the net effect will be a wash. "We spent a lot of time and money studying this" in several cities, which Antioco declined to name.
Blockbuster is struggling to keep up with a changing video market. It has lost rentals and sales to discounters selling DVDs. Rivals such as Netflix and Wal-Mart are renting DVDs by subscription via the mail.
Blockbuster told investors that operating income likely will be flat in 2005, before $50 million in extra spending to promote "no late fees." The No. 1 chain, with about 40% of the rental market, is expected to end 2004 with $135 million in net profit on $6 billion in revenue.
"We believe the core rental business will be soft in 2005," he says.
In another matter, Antioco reiterated his interest in buying No. 2 video chain Hollywood Entertainment. He has offered $700 million but refused to accept conditions set by Hollywood's board. Antioco says he hopes Hollywood will talk, but, "We won't rule out appealing to their shareholders directly."
Separately, financier Carl Icahn said in a Securities and Exchange Commission filing that he believes he's now the biggest shareholder in Blockbuster and Hollywood and has told them he favors a merger.
http://www.usatoday.com/money/media/2004-12-14-blockbuster-latefees_x.htm?csp=24&RM_Exclude=Juno
What I want to know if that means that they will "forgive" outstanding laten fees -- I still owe about $6 from 1989 ....