Blockbuster urges shareholders to reject bid by activist investor for board seat

Blockbuster fights activist bid for board seat

DALLAS — Blockbuster Inc. on Monday urged shareholders to reject a bid by an activist investor to garner a seat on the company’s board.

Gregory S. Meyer, who founded a DVD rental kiosk company in 2001 called DVDXpress, is looking to take the seat held by insurance executive James W. Crystal.

In a securities filing last month, Meyer said Blockbuster’s board “lacks sufficient expertise and alignment of interests with shareholders, which has led to a significant loss of shareholder value over the past several years.”

Blockbuster responded Monday, saying Meyer does not have “the critical industry and business experience” needed to serve as a director. The company warned that allowing Meyer on the board would be foolhardy given the host of challenges it faces, “from a constantly changing competitive landscape to significant financial and liquidity pressures.”

Blockbuster has struggled as the popularity of Netflix Inc., which provides DVD rentals by mail and over the Internet, has soared. It is trying to avoid having to file for Chapter 11 bankruptcy court protection, a possibility that has loomed over the company as its business has faltered.

Meyer, 38, has also played a small role in the erosion of Blockbuster’s traditional rental store business. He sold DVDXpress in 2007 to Coinstar Inc., which later merged the company with its own Redbox business. The spread of Redbox vending machines, which offer new releases for $1 per night, has forced Blockbuster to come out with its own vending machines to compete.

According to his filing, Meyer is now an independent consultant to companies in the home entertainment industry. He holds 620,000 shares of Blockbuster’s common shares, or about 0.44 percent. Attempts to reach Meyer though a telephone number listed on his proxy filing were not successful.

Blockbuster shares were up a penny at 36 cents in midday trading.