News

Coinstar sheds inactive Blockbuster kiosks

June 12, 2013

According to Home Media Magazine, Coinstar reported in a recent regulatory filing that it had sold an undisclosed number of Blockbuster Express kiosk units to third-party providers.  

In June 2012, Coinstar bought out more than 10,000 Blockbuster Express kiosks from NCR Corp. — a transaction that Coinstar's then CFO J. Scott Di Valerio believed would be profitable by this year.

"With the closing of the NCR transaction, we have strengthened our ability to bring the value and convenience of Redbox entertainment to new retail partners and their customers," said Di Valerio, the recently-appointed CEO of Coinstar, during last year's purchase announcement. "While we expect to incur losses during the initial period, as we swap out the acquired kiosks for new Redbox kiosks, we expect the economics to improve and become accretive sometime in 2013."

After a year-long overhaul of the fleet, which involved replacing or deinstalling 6,200 Blockbuster units, Coinstar sold its deactivated kiosks for $17.9 million.

Eric Wold, analyst with B. Riley & Co. in Los Angeles, said the move by Coinstar made sense.

"While there was a potential opportunity to license those kiosks to third parties within non-competitive markets within a revenue-sharing agreement, we believe [the sale] was the less risky and easier decision for management to make," Wold wrote in a June 11 note, which was quoted by Home Media.

Read more about DVD kiosks.