OAKBROOK TERRACE, Ill. -- Redbox Automated Retail LLC, a subsidiary of Coinstar Inc., has agreed to purchase assets of NCR Corp.'s entertainment line of business. The acquisition includes the purchase of the DVD kiosks, certain retailer contracts and DVD inventory from NCR. Coinstar and NCR also will enter into a strategic supplier arrangement through which Coinstar will purchase product and services from NCR.
Redbox will pay up to $100 million for the assets. Through the manufacturing and services agreement, Coinstar will procure from NCR hardware, software and services that will yield $25 million in margin for NCR over five years.
"As the global self-service solutions leader, NCR has strong technology, manufacturing and servicing capabilities, and we look forward to leveraging their expertise as Coinstar continues to grow its core automated retail businesses and expands its offerings," said Scott Di Valerio, CFO of Coinstar and interim president of Redbox.
"Through this agreement with Redbox, NCR will be better positioned to focus on expanding our business in our targeted industries," John Bruno, executive vice president and chief technology officer of NCR, said. "Additionally, this transaction affords us the opportunity to develop a long-term strategic relationship with Coinstar and partner on delivering new and innovative solutions to the market."
The deal is subject to regulatory approval and is expected to close in third-quarter 2012.
NCR licenses the Blockbuster brand name from McKinney, Texas-based Blockbuster LLC. Blockbuster Express emailed the following letter to its customers:
Dear Valued Customer,
NCR, which operates your Blockbuster Express kiosks, has entered into an agreement to sell its kiosks and other assets to Redbox. Until the transaction is completed (we anticipate in the third quarter of 2012), you will continue to enjoy the convenience, choice, and value you're used to from Blockbuster Express. Until the sale is completed, we will continue to run the business as we have been, focused on bringing you the latest New Release movies with most titles only $2 for the first night. ... We'll continue to provide you with information on any changes that result from this recent announcement, but for now we just wanted to say thanks for being our customer.
Sincerely, Justin Hotard, General Manager
Coinstar, Verizon Form Joint Venture
Separately, Coinstar and Verizon Communications Inc. have announced the formation of a joint venture that will create a new choice for consumers seeking a way to access video entertainment. The venture's services will combine Redbox's new release DVD and Blu-ray Disc rentals with a new content-rich video on-demand streaming and download service from Verizon.
The venture plans to introduce the product portfolio in the second half of 2012. It will offer subscription services and more that will allow U.S. consumers to enjoy the new and popular entertainment they want, whenever they choose, using the media and devices they prefer.
This venture will create the kind of national multi-platform product that customers are demanding from video entertainment service providers. It will leverage Verizon's relationships with entertainment content providers, its cloud computing technologies and IP network infrastructure to distribute video on-demand content.
By offering instantly available online and mobile content with immediate access to physical media through rental kiosks, Verizon and Redbox will be "uniquely positioned" to deliver the best of the digital and physical worlds to consumers, they said.
The joint venture is a limited liability company with New York City-based Verizon holding a 65% ownership share and Redbox holding a 35% ownership share at the outset.
Verizon is a leader in delivering broadband and other wireless and wireline communications services. Verizon Wireless operates a wireless network with nearly 109 million total connections nationwide. Verizon also provides converged communications, information and entertainment services over a fiber-optic network and delivers integrated business solutions.
Oakbrook Terrace, Ill.-based Redbox offers new-release DVD, Blu-ray Disc and video game rentals through its network of self-service kiosks. It has rented more than 1.5 billion discs and is available at more than 35,400 kiosks across more than 29,000 locations nationwide, including select McDonald's restaurants, grocery, drug and convenience stores, select Walmart locations and select Walgreens locations.
Coinstar, Bellevue, Wash., is a leading provider of automated retail solutions offering convenient services that make life easier for consumers and drive incremental traffic and revenue for retailers. The company's core automated retail businesses include the Redbox self-service DVD rental and Coinstar self-service coin-counting brands. The company has approximately 35,400 DVD kiosks and 20,200 coin-counting kiosks in supermarkets, drug stores, mass merchants, financial institutions, c-stores and restaurants.
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