The ratings on Blockbuster Inc. reflect the risks of operating in a mature and declining video rental industry, the company's dependence on decisions made by movie studios, its thin cash flow protection measures, high leverage, and the technology risks associated with delivery of video movies to the home. Industry fundamentals for the video rental market are weak and Blockbuster's profitability is heavily dependent on that market. The company generated 71% of its total sales from its movie rental business in 2005, and its domestic rental same-store sales have been weak since 2001. The company was particularly hard hit in 2005 as the industry declined at a double-digit rate. The industry had declined at a low single-digit rate over the prior
