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Investor in Dallas-based Blockbuster threatens fight for board seat

Blockbuster Inc. shareholder Gregory Meyer is giving the struggling video rental company one last chance to name him voluntarily to the board of directors.

If Blockbuster doesn't accept the offer in writing by today, Meyer said in a Securities and Exchange Commission filing late last week, he will launch a full-scale election campaign for a seat.

"As a shareholder, I'm presenting them with an opportunity to move forward in a very amicable way, a very fair way," Meyer said in an interview Monday.

As part of the proposal, Meyer said he will pay all of the expenses he has incurred up until now in seeking the board seat.

He declined to specify how much he has spent, but said an all-out proxy contest could be cripplingly expensive for Blockbuster.

"The expense for a company for proxy contests can easily run into the millions of dollars," he said. "For a company in Blockbuster's position, where it's very capital-constrained, it's extremely important for the company to preserve its capital."

Blockbuster said in a brief statement that it stands behind its current board members.

But Meyer, who founded DVD kiosk company DVDXpress, said the board has failed.

"The board has not acted in the best interest of shareholders," he said. "The stock is down 95 percent over the last three years. There's been an enormous destruction of shareholder value. Enough is enough.

"This is a company that has missed two billion-dollar-plus opportunities over the last 10 years, first with Netflix and then with Redbox."

Meyer, 38, sold DVDXpress in 2007 to Coinstar Inc., which merged it with Redbox in 2009.

Meyer owns 620,000 shares of Blockbuster's Class A stock.

Shares of Blockbuster gained a penny Monday to close at 39 cents.

Meyer said in his filing that he's confident he has enough shareholder votes to win election to the board at the company's June 24 annual meeting, but doesn't want to force Blockbuster to spend the money on the contest.

He said he doesn't think the entire board and management team needs to be replaced.

"I don't think it's necessary at this time," he said.

Although Blockbuster's sales have shrunk the last few years, and the losses and debt and store closures have piled up, Meyer said the company should eventually hit a level where surviving stores are profitable.

"The company still generates more revenue than any of its competitors," Meyer said.

Blockbuster had sales of $4.06 billion last year, down from $5.06 billion in 2008.

But he noted that Blockbuster's recent success in securing exclusive 28-day video rental windows for new-release movies from Fox, Sony and Warner Bros. is a big advantage on which the company has to turn a profit.

"To be honest, a management team that wasn't able to turn that initiative into a profitable situation would not be worth their salt," Meyer said.

Blockbuster will release its first-quarter financial results Thursday.

Source: http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-blockbuster_11bus.ART.State.Edition1.4048f2e.html