The ratings reflect Dallas-based Blockbuster Inc.'s participation in the declining video rental industry, extremely competitive home entertainment market, 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 almost 75% of total sales from rentals. Although revenues continue to slide slightly and domestic same-store rentals have been mixed, the company has improved operating performance driven by higher margins. Higher rental gross margins and robust cost containment have driven EBITDA growth of approximately 34% for the 12 months ended July 6, 2008, compared to the previous year. Standard&Poor's Ratings Services anticipates incremental improvements in performance from the company's new strategy implemented in the second-half
