Queue the write-ups of "Coinstar is doomed!"
But maybe that is too hasty. Coinstar has problems, yes, and a difficult transition to come, but it may be a bit premature to grab the shovels and reserve a hearse.
Studios Sink Coinstar's Holiday
As Coinstar's management tells the tale, the underperformance in the fourth quarter can be laid at least in part at the feet of movie studios belonging to the likes of Time Warner (NYSE: TWX) and News Corp (NYSE:NWS).
Desirous of preserving their ridiculously profitable video-on-demand/pay-per-view and DVD sales, these studios basically forced Coinstar into accepting a 28-day window of exclusion; Coinstar cannot load its Redbox DVD rental kiosks with these new releases for 28 days. Given that the Redbox business model is predicated at least in part on impulse rentals of new movies, that's a serious blow, and that fed into the lower-than-expected same-store sales of 12.5% for the period.
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