Blockbuster reports wider loss

By Gina Keating

LOS ANGELES (Reuters) - Blockbuster Inc. (BBI.N: Quote, Profile, Research), the No. 1 U.S. video rental chain, reported a surprisingly big quarterly loss on Wednesday on costs for its new online rental program and flat in-store sales, sending its shares down more than 12 percent.

The company also said it will sell its U.K.-based Game Station chain to Game Group Plc (GMG.L: Quote, Profile, Research) for $150 million, with most of the proceeds going to pay down debt. The move is part of the company's plan to sell off secondary assets.

Blockbuster posted a first-quarter net loss of $46.4 million, or 26 cents per share, compared with a loss of $1.9 million, or 3 cents per share, a year earlier.

Revenue rose 5.4 percent to $1.47 billion, with $20 million coming from the termination of Blockbuster's Brazilian franchise agreement.

Analysts, on average, had forecast a loss of 15 cents a share on revenue of $1.37 billion, according to Reuters Estimates.

Blockbuster, while trying to pay down debt, has been spending aggressively to support its Total Access marketing plan that gives online customers more rentals and the option to swap DVDs at Blockbuster stores.

The company had more than 3 million paying subscribers for the business at the end of the first quarter.

The program, launched late last year, has reinvigorated Blockbuster online against rival Netflix Inc. (NFLX.O: Quote, Profile, Research), according to company officials.