* SK looking at Blockbuster, other overseas opportunities
* Analysts question synergies from potential deal
* SK Tel shares up 0.3 pct; wider market up 0.9 pct
(Adds background on Blockbuster assets)
By Hyunjoo Jin and Caroline Humer
SEOUL/NEW YORK, March 30 SK Telecom (017670.KS)
is considering investing in bankrupt U.S. video rental chain
Blockbuster Inc BLOAQ.PK, an official with South Korea's top
mobile carrier said on Wednesday.
"We are looking at many opportunities overseas," said the
official, who requested anonymity because she was not
authorized to talk to the media. "But no details have been
SK Telecom, which controls around 50 percent of the nearly
saturated South Korean market, has been looking for
opportunities to invest overseas to generate new revenue
Spokespeople at Blockbuster and SK Telecom declined to
Blockbuster, which filed for bankruptcy last fall under
pressure from mail-order and digital competitors like Netflix
Inc (NFLX.O), will hold an auction for its assets on Monday.
A group of creditors have offered to buy the company for
$290 million. Any offer from SK Telecom or others would have to
beat that "stalking horse bid." [ID:nSGE71K0AI]
Blockbuster said it would consider bids for all of the
company or for parts of it if they can be combined with other
A CONTENT PLAY?
The news about the potential Blockbuster investment,
previously reported by the New York Post, came as a surprise to
some analysts, who raised doubts about the outlook for the
movie rental business.
"We are slightly perplexed by (SK Telecom's interest)
because no immediate synergies come to mind and the required
restructuring of the company could be very costly," CLSA
analyst David Lee said in a report.
"A consummated Blockbuster deal would be quite negative due
to the large size of the company and its declining business,"
Daewoo Securities analyst Byun Sung-jae said the potential
purchase could help SK diversify its content sourcing, adding
that the price could be lower than $290 million.
Blockbuster, in addition to its remaining 2,500 store
locations, also has digital delivery agreements with Hollywood
studios including Sony Pictures, Twentieth Century Fox, Warner
Home and Universal Studios. In addition, it has movie kiosks
and a by-mail video business.
It has agreements with telecommunications companies in the
United States including AT&T, Verizon and Sprint that allow
users to rent and purchase movies to watch on their mobile
SK Telecom's shares gained 0.3 percent in a broader market
.KS11 that closed up 0.9 percent.
The carrier's overseas investments so far have produced few
tangible results, analysts say.
SK Telecom exited the U.S. market in 2008, selling its
struggling Helio mobile unit to Virgin Mobile USA. It sold back
its stake in China Unicom (0762.HK) for $1.3 billion in 2009.
Billionaire investor Carl Icahn, who owns debt in
Blockbuster, has also indicated he may take part in the
auction. Bids are due on Thursday.
The stalking horse bid is from a group of hedge funds that
include Monarch Capital, Owl Creek Asset Management, Stonehill
Capital Management and Varde partners.
(Additional reporting by Caroline Humer in New York; Editing
by Lisa Von Ahn, Dave Zimmerman)