The South Korean mobile operator SK Telecom is considering acquiring a stake in the US video/DVD rental chain Blockbuster, according to media reports.
Citing a source close to the company, the Financial Times reported today that SK Telecom is…
The South Korean mobile operator SK Telecom is considering acquiring a stake in the US video/DVD rental chain Blockbuster, according to media reports.
Citing a source close to the company, the Financial Times reported today that SK Telecom is considering the bid in an attempt to improve its own content development capabilities.
The source reportedly said that it was one of many opportunities that SK Telecom was considering as it looked to expand abroad.
SK Telecom would not make any official comment.
The interest in Blockbuster comes at a troubled time for the rental chain, as it is struggling against fierce competition from online film providers like Netflix, which allow American consumers to download films without needing to rent a DVD.
Blockbuster’s most recently published financial results – Q2 2010 – showed a net loss of US$69m, an increase from the loss of US$37m for the same period in 2009.
It filed for Chapter 11 bankruptcy protection in September 2010.
In March 2011, the US bankruptcy authorities agreed to allow Blockbuster to start the process of selling the company by conducting an auction process.
As a part of this process, it entered into a “stalking horse” purchase agreement with Cobalt Video Holdco, a company formed by several funds, whereby Cobalt would set the minimum bid in any auction.
In January, SK Telecom announced net income of KRW1.411 trillion (US$1.3bn) for 2010. It reportedly controls around 50% of the domestic mobile market.
Its previous entries into the US market have had mixed results.
Its US subsidiary, the mobile operator Helios, was sold off to Virgin Mobile in 2008 after suffering losses.
It also reportedly tried to invest in Sprint Nextel in 2008, but was unsuccessful.
SK Telecom’s reported interest in Blockbuster is not the only surprising expansionary move by a South Korean telco in recent months.
The fixed and mobile operator Korea Telecom (KT) has recently acquired a 35.83% stake in BC Card, the country’s largest credit card company.
When it announced the deal in February, KT said that it was exploring new opportunities in mobile banking services.
