The ratings on Blockbuster Inc. reflect Standard&Poor's Ratings Services' concerns regarding its near-term liquidity position, its participation in the declining video rental industry, an extremely competitive home entertainment market, its dependence on decisions made by the movie studios, and a highly leveraged capital structure. The rating also indicates that the company is vulnerable to default. Standard&Poor's expects sales are likely to fall significantly over the next 12 months, but margins may improve as the company continues to execute on its profitability initiatives. Sales may rise slightly in the back half of the year based on the improved theater traffic in early 2009. Sales fell 4.3% for the year ended Jan. 31, 2009, due to a smaller
