Blockbuster Expects FTC Suit Over Bid

The Federal Trade Commission is likely to try blocking Blockbuster Inc.’s proposed purchase of rival Hollywood Entertainment Corp. on antitrust grounds, a Blockbuster official said Wednesday.

General counsel Edward Stead said Blockbuster officials held a fruitless meeting Tuesday with FTC staff, leading him to believe that the agency planned to file a lawsuit in federal court to bar the acquisition.

FTC spokesman Mitch Kates said he couldn’t say whether the agency’s staff had recommended filing a lawsuit against Blockbuster.

The FTC is examining whether a merger of the two largest U.S. movie-rental companies would give the combined company too much power over pricing. A Blockbuster-Hollywood Entertainment deal was scuttled by the FTC in 1999 on similar grounds.

Dallas-based Blockbuster says the market has changed in six years because rental stores now face competition from online services and from discounters selling cheap DVDs.

Blockbuster shares fell 41 cents Wednesday to $9.05 on the New York Stock Exchange. Hollywood Entertainment fell 16 cents to $14.05 while Movie Gallery rose 31 cents to $23.71, both on Nasdaq.