By Sarah Falson
SYDNEY: Video Ezy has entered in to an agreement to acquire the master franchise right to Blockbuster in Australia for an undisclosed amount, and has applied to the ACCC for clearance, with a decision expected soon.
If cleared, the transaction will see the Blockbuster brand remain, providing entertainment through traditional outlets, as well as via digital media, to their customers.
Video Ezy managing director, Paul Uniacke, said that the acquisition will deliver positive results for franchisees of both organisations, along with the millions of consumers who are members of either the Video Ezy or Blockbuster video/DVD rental outlets.
“There are significant synergies to be achieved, and we believe it is an exciting time for both organisations,’’ said Uniacke.
“The deal comes against the background of significant growth during 2006 for Video Ezy in both rental and retail sales, and a record fourth quarter.
“Video Ezy has had success in the retailing of home entertainment products this year and has grown market share. We have partnered with some of our major distributors to enhance our product offering to consumers in 2007, and we look forward to improved sales through these innovations.”
Video Ezy recently announced it would commence trialling a digital rental service along with “other digital delivery mechanisms”, which Current.com.au believes means the company will soon offer movie and music downloads via the internet.
The company also said it would add more franchisees in the near future.
Video Ezy general manager, Andrew Gardiner, said that the acquisition should have a positive impact on the profitability of both brands.
“It is our opinion that there is considerable opportunity to grow both rental and retail sales, as well as cost savings which can only be unlocked through this acquisition,“ he said.
Blockbuster Australia managing director, Rick Wight, said: “The licensing of the master franchise rights marks the completion of a re-franchising program that commenced in early 2005.
“For our members in Australia, this change should be seamless, and to all stores it should be ‘business as usual’.”
According to Wight, Blockbuster members should expect the same service and products they are used to, with “exciting new digital opportunities,” he said.
“The decision to go with Video Ezy was taken after a comprehensive tendering process. Under the agreement, the Blockbuster-branded outlets would remain part of the Blockbuster global network of more than 8,000 stores but they would operate under a Master Franchisee agreement here in Australia.”
Blockbuster currently has 364 outlets nationwide, with 23 owned by the company and 341 owned by franchisees. The 23 company-owned stores would be acquired as part of the deal, but the franchisee-owned stores would continue as is.
Video Ezy currently has 518 outlets which are all run by franchisees.