Leading position in video rental; and Strong worldwide brand recognition. Poor industry fundamentals; Highly competitive home entertainment industry; Operational challenges associated with diversifying distribution channels; Dependence on decisions made by movie studios; and Highly leveraged capital structure. The ratings reflect Blockbuster Inc.'s participation in the declining video rental industry, extremely competitive home entertainment market, operational challenges as the company diversifies its distribution channels, dependence on decisions made by the movie studios, and highly leveraged capital structure. Blockbuster's rental revenues reflect the declining industry trend as the company generates more than 70% of total sales from rentals. Revenues fell 5.7% for the quarter ended Sept. 30, 2007, primarily because of declines in rental revenues and merchandise sales. The decline in movie
