SK Telecom mulls Blockbuster bid to boost mobile content efforts

South Korean wireless operator giant SK Telecom is considering making a bid for bankrupt U.S. video rental chain Blockbuster as the carrier continues its efforts to build up its content development initiatives.

Citing a source close to the company, The Financial Times reports SK Telecom's proposed Blockbuster acquisition is one of several options the company is exploring as it seeks opportunities to expand abroad, a strategy intended to compensate for stagnant revenue growth in its home market.

SK Telecom boasts a subscriber base totaling about 24 million, corresponding to about 50 percent of the South Korean market. CEO Jung Mang-won has stated carriers must produce their own mobile content and applications to remain competitive in the evolving mobile ecosystem. Last year, SK Telecom announced it will invest roughly $907 million as part of a three-year plan to develop applications and software targeting the U.S., China and Southeast Asia markets.

The Blockbuster chain, which includes 2,500 retail outlets, filed for bankruptcy in September 2010 after failing to keep pace with rivals like Netflix. Last month, a U.S. federal bankruptcy court approved the company's plan to sell itself to creditors for about $290 million. Blockbuster's existing mobile solutions include Blockbuster On Demand, introduced by Verizon Wireless (NYSE:VZ) in mid-2010 in conjunction with the launch of the Droid X smartphone.

SK Telecom declined to comment on its interest in Blockbuster. Investors expressed surprise over the possibility of a deal: "We are slightly perplexed because no immediate synergies come to mind and the required restructuring of the company could be very costly," said CLSA analyst David Lee in a report. "A consummated Blockbuster deal would be quite negative due to the large size of the company and its declining business."

For more:
- read this Financial Times article

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