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Blockbuster Teams With RadioShack, Universal Pictures

Retail: The deal would allow the video store giant to offer entertainment products and an on-demand movie service.


DALLAS — Blockbuster Inc., the world's largest video store chain, said Tuesday it will offer RadioShack Corp. mini-stores inside its own outlets and Universal Pictures films through its digital entertainment network.

Blockbuster will install RadioShack sections or kiosks in as many as 5,000 of its 7,700 stores, the companies said. Blockbuster also will offer Universal Pictures movies for digital streaming via the Blockbuster Entertainment On-Demand service. Additional terms of the agreements weren't disclosed.

The agreement with RadioShack, which sells electronics through more than 7,100 stores and dealers, will help Blockbuster offer more entertainment products in its stores and will expand RadioShack's distribution. The agreement with Universal Pictures comes as Blockbuster, which is majority-owned by Viacom Inc., is testing the video on-demand system in three markets.

"For Blockbuster, you have incremental product to put through what has been an unproductive space," said Aram Rubinson, an analyst with UBS Warburg who has a "strong buy" rating on Blockbuster and a "hold" rating on RadioShack.

The alliance also lets RadioShack eliminate a potential competitor in Dallas-based Blockbuster, which has been investigating sales of consumer electronics and services, Rubinson said. Blockbuster last September began selling DirecTV Inc. satellite-television service and equipment in its stores. RadioShack also sells DirecTV's products.

The RadioShack stores will be installed in 130 Blockbuster locations by this summer, including Las Vegas, Norfolk, Va., Austin, Texas and Tulsa, Okla. The stores, which will sell high-speed Internet service, VCRs, DVD players, batteries and other products, will be in Blockbuster's remaining locations by the end of 2002.

RadioShack said it will have access to more than 3 million Blockbuster consumers daily. The Fort Worth, Texas-based company will pay a license fee to Blockbuster for each location, which will range in size from kiosks to 600 square-foot sections.

Blockbuster has been testing an on-demand movie service in Portland, Ore., Seattle and American Forks, Utah, through Enron Corp.'s fiber-optic telecommunications network. Blockbuster said it also reached a new revenue-sharing with Universal for rentals of new films.

Blockbuster shares rose 63 cents to close at $14.11. RadioShack rose $1.15 to $40.85. Both trade on the New York Stock Exchange.

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