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UPDATE: Dish Finalizes $320.6 Million Purchase of Blockbuster

NEW YORK -(Dow Jones)- Dish Network Corp. (DISH) on Tuesday finalized its $320.6 million purchase of Blockbuster Inc. (BLOAQ), putting the video rental company in the hands of one of the nation's most notable satellite moguls.

Dish, controlled by satellite mogul Charles Ergen, earlier in the day received clearance from a bankruptcy judge giving it more time to decide on which Blockbuster stores to keep, clearing the path for sale closing.

"We are pleased to have purchased the assets of Blockbuster and look forward to building on the nationally recognized Blockbuster brand while improving the experience of delivering entertainment to consumers," said Tom Cullen, executive vice president for Dish Network, in a statement.

Judge Burton R. Lifland of U.S. Bankruptcy Court in Manhattan signed off on an amended sale agreement that gives Dish 90 extra days--or through July 21--to decide on which store leases to reject and which to assume. The amendment also allows Dish 90 more days to decide what to do with third-party contracts other than store leases.

Weil, Gotshal & Manges LLP's Stephen Karotkin, a lawyer for Blockbuster, said most landlords have already agreed to the extension.

Lifland said he hoped the deal will "close in the p.m. portion of the day," and it did.

A few parties had minor objections to the amendments, including the studio unit of Lions Gate Entertainment Corp. (LGF), which wanted Dish to assume revenue-sharing agreements for several films, including "Saw: The Final Chapter." Lifland overruled that and the other objections.

The two sides had set last Thursday as the earliest date to finalize Dish's $320.6 million purchase of Blockbuster, but as Dish continues to sort out what to do with more than 1,500 remaining Blockbuster leases, both companies decided that date was impossible. They had until May 5 to close it.

Earlier this month, Blockbuster filed court papers listing store leases it wishes to assume. Dish has since said the company is still evaluating the leases and would at some point submit an updated list to the court, and now it has the 90-day extension. After receiving court approval to assume more leases on Tuesday, Dish has now assumed about 400 Blockbuster leases.

Dish won a bankruptcy-court auction for Blockbuster by beating a consortium led by Carl Icahn, among others, submitting a final bid of $320.6 million. The deal was approved by Lifland two days after the auction began.

At the time of the sale, Dish said it planned to keep some Blockbuster stores open, something Lifland seemed pleased with in approving the sale. Dish cited the cross-marketing opportunities of selling its satellite service to Blockbuster customers. Dish could also offer Blockbuster's on-demand services and digital products to its satellite subscribers. Indeed, Blockbuster rival Netflix Inc. (NFLX) said in its annual letter Monday that it expects Dish to launch a "substantial" streaming subscription video service under the Blockbuster brand.

Battered by the popularity of Netflix's DVD mailing service, Blockbuster filed for Chapter 11 protection in September with plans to reorganize, but lackluster holiday sales and continued losses forced the company to put itself on the market.

The company, which had more than 3,300 stores at the time of its filing, will have near or below 1,000 after its most recently announced spate of lease rejections, according to court papers.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)

-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; [e-mail]

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