Blockbuster begins commercial property negotiations

Posted 19/02/2010

Blockbuster has begun negotiations with more than 600 commercial property landlords in a bid to reduce its rent payments.

The international film rental chain has been badly hit by competition from postal DVD rental services and the availability of films to download from the internet, and its US operation is planning to close more than 900 stores.

It also needs to cut costs in the UK and is working with KPMG on ideas to restrict its spending.

One of the schemes involves approaching commercial property landlords to request that they renegotiate leases.

The negotiations will mostly focus on trying to reduce the rents charged by the commercial property owners, but could also involve arrangements to allow Blockbuster to exit leases early.

Undertaking lease renegotiations in order to help reduce the running costs of struggling businesses has become an increasingly common tactic during the recession.

Blacks Leisure successfully used it as part of a company voluntary arrangement that allowed the outdoor clothing retailer to carry on trading.