Beleaguered DVD renter and retailer Blockbuster Inc. got no respite from its problems last quarter as revenue plunged 21% and net loss, excluding one-time costs, more than doubled.
Blockbuster stock, which was already trading at under $1, plunged 13% in after-hours trading to 72 cents on the news.
The company had a net loss of $116.8 million for the third quarter, much of which was connected to one-time costs from the company's recent debt refinancing and the sale of an Irish subsidiary. Excluding those events, net loss was $38.3 million.
Total revenue for the quarter ended Sept. 30 was $910.5 million.
Blockbuster attributed its problems to cutbacks in marketing and inventory in order to conserve costs and pay debt, ongoing store closures and the "macroeconomic environment." The ongoing recession and particular weakness in the DVD market hit Blockbuster hard. Domestic same-store rental revenue fell 14.5%, compared with the year-earlier quarter, while same-store sales revenue plummeted 35.6%.
In the quarter that ended Sept. 30, Blockbuster closed 216 stores. The DVD retailer it said was expecting to shut as many as 115 in the current quarter. In September, the company said it would close nearly 1,000 locations by the end of 2010.
One of the few pieces of good news for Blockbuster was an increase in its gross profit margin to 57.3% from 53.7% a year earlier. The company said it has increased its revenue-sharing arrangement with movie studios for rentals of some top-selling DVDs and that it was shifting focus away from video games, a once-hot business that has slowed down this year and carries smaller profit margins.
In a statement, Blockbuster Chief Executive Jim Keyes said that with debt financing issues solved for the time being, he is aiming for growth this quarter. "In the fourth quarter we are adding inventory, expanding product assortment, increasing advertising and reaching out to our customers in new and exciting ways," he said.
The company is also rolling out Blockbuster-branded rental kiosks with partner NCR Corp. to compete with Redbox and is deploying its digital download and streaming service to new devices, including TiVo digital video recorders.
-- Ben Fritz
Photo: "Duplicity" DVDs at a Blockbuster store in Park Ridge, Ill. Credit: Tim Doyle / Bloomberg
Exclusive first look: 'Battlestar' prequel 'Caprica' retools, reduces and readies itself for January debut
"Caprica" arrives on Syfy Jan. 22, and in anticipation of that premiere, the network has released this poster for the show exclusively to the Watcher site. The image at right, which features the "Caprica" character Zoe Graystone (Alessandra Torresani), is the key art for the new series.
"There's something really interesting about the idea of Zoe and the Eve metaphor," said Mark Stern, executive vice president of original content for Syfy and co-head of Universal Cable Productions, in an interview on Thursday.
"Caprica," which serves as a prequel to "Battlestar Galactica" and tells the story of the invention of the mechanized Cylons, "deals with our relationship to technology and the question of 'When is too much knowledge a bad thing?' Knowledge and technology can turn against you and can be dangerous weapons," Stern said.
He noted there were many internal discussions at Syfy about the signature image for the new series, which stars Eric Stoltz, Esai Morales, Polly Walker and Paula Malcolmson. But Stern and other executives realized all the debate was a good thing. "That's the point of the show," he said. "Like 'Battlestar,' the show doesn't take one particular stand -- it starts a discussion. That's true of 'Caprica' too. What we love about this image is that it invites many different points of view or opinions and they're all valid."
The series will premiere with a two-hour pilot that is already available as a standalone DVD. Eight additional hours of "Caprica" will air through March. Then the show will take a break and the remaining nine hours of "Caprica's" first season will air some time in the second half of 2010.
If you've done the math in the previous paragraph, you've realized that "Caprica's" episode order has been reduced by one hour. Syfy had originally commissioned a total of 20 hours for Season 1, but the show, which is currently in production on the last third of the season in Vancouver, will now consist of 19 hours.
Stern said that the decision to reduce the episode order was made in consultation with the show's creative team and was driven purely by financial considerations. Quite simply, "Caprica" turned out to be more expensive than the network thought it would be, he said. The episode reduction was part of an effort to make those 19 hours as good as they could be without sacrificing the quality of the drama, a story of intrigue and family conflict that follows the Adama and Graystone clans in settings that resemble present-day Earth.
"We always knew it would be a challenge to bring it in on budget, and the deeper we got into it, the more we realized that if we [stuck to the budget too closely], it was not going to be satisfying," Stern said. "We were cutting corners and we weren't happy with that and the executive producers weren't happy with that."
It turned out to be "a more elaborate production" than "Battlestar," Stern said. Once the standing sets for "Battlestar" were built, that show was mostly filmed on soundstages and thus budgets were somewhat more containable. Location shoots were rare. But "Caprica" is "set in the real world," Stern said. "They're always outside."
The show's creators also ended up devoting more time to certain characters than they had originally planned to, and the show lined up recurring guest stars such as James Marsters and Patton Oswalt.
Stern said that as part of the effort to keep costs down, scripts were coming in with a lot of what he characterized as "bedroom and boardroom" scenes. "That's not the show," he said. "We wanted to keep the quality of the show as high as we could, and so we put more money into it, but it still wasn't quite enough. We said, 'OK, would it help to cut an episode?' and we talked about it and they adopted the decision creatively."
There was a discussion regarding how many episodes to cut, and the show's executive producers -- Ronald D. Moore, David Eick, Jane Espenson and Kevin Murphy -- said cutting two episodes would be too difficult. But Stern said they saw the wisdom of cutting one hour.
"They're certainly vocal," Stern said of his relationship with the show's creative team. "But they've been great about this and they endorsed this decision and are making it work. [A few years ago] Ron and David were the ones who called me to say, 'There are only going to be four seasons of "Battlestar."' They are the first ones to recognize that it's better to do fewer episodes than stretch something out and vamp."
"This was the time to make the decision" about whether to cut an episode, Stern added. Production is underway on the thirteenth hour of the show and thus the producers have time to retool the last third of the season. "If it didn't work creatively, they weren't going to do it," Stern said. During production of Season 1 of "Caprica," there have been the kinds of creative growing pains associated with any first-year program. I've had ongoing contact with various people associated with "Caprica," not just Stern, and those sources say the growing pains have been "normal" and nothing out of the ordinary.
The show recently took a two-week break to retool scripts and recalibrate where "Caprica" was heading, and Kevin Murphy, a veteran of "Desperate Housewives," has joined the show. He, along with Eick, Moore and Espenson, is an executive producer of "Caprica" and Murphy has been taking the lead on breaking stories.
"Ron, Jane and David are still very much in that mix," Stern said. "Every show has to find its voice and figure out what it wants to be. Every show has to find out which characters pop and which story lines play. There were some growing pains as they found the right balance of stories and characters."
Despite the differences between "Caprica" and "Battlestar," fans of the latter show should find the storytelling of the prequel series recognizable, even if the new show has a somewhat different tone, Stern said.
"The thing that 'Caprica' has that the 'Battlestar' viewer will recognize -- aside from the obvious little winks and nods [to the saga of the rag-tag fleet] -- is that 'Caprica' is, at its core, a strong character drama about people going through situations in extremis," Stern said. "There are characters who are driven to do things that are morally ambiguous because of the situations that they're put in. And yet tonally, it's not as dark, it's not as grim. Because [the characters] are not on the run, having had their whole world destroyed, that allows more opportunities for poignancy and joy and celebration.
"There's definitely more of that than there was in 'Battlestar.' It's not about someone getting their jaw broken every other episode," Stern said with a laugh. "But there are elements of that kind of extremity in this that I think will attract 'Battlestar' viewers. And yet our hope is, because it is dealing with world that is more familiar to us and dealing with issues that are maybe a little more germane to our daily lives, that it will attract a broader audience."
A few final thoughts from me: I'm reserving judgment about "Caprica's" overall quality until I see more of Season 1, but I liked the pilot and think the premise has potential (my review of the first two hours of "Caprica" is here. There's a preview clip of the show below). "Caprica" has a tough act to follow -- "Battlestar" is one of my favorite shows of all time -- but I'm looking forward to Jan. 22, which, as I noted in this "Dollhouse" post, is likely be a interesting night for fans of genre television.
Photos: Toressani; Morales; Walker; Malcolmson; Stoltz.
The Star Report: Spider-Man arrested? Plus: 'Twilight: New Moon' premiere
Taylor Lautner, Kristen Stewart and Robert Pattinson at "Twilight: New Moon" premiere. Plus: Kristen Bell, Jason Bateman, Eric Dane, Levi Johnston, Stephanie Pratt.
In 'Fantastic Mr. Fox,' The Dazzle Is In The Details
Director Wes Anderson's first foray into animation, The Fantastic Mr. Fox, is based on the charmingly wicked children's book by Roald Dahl. The film follows a battle of wits between the sly fox (voiced by George Clooney) and three formidable farmers. Critic Kenneth Turan says the film's stop-motion animation is tailor-made for the sort of quirky details that Anderson employs.
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