The ratings on Dallas, Texas-based Blockbuster Inc. reflect its participation in an extremely competitive home entertainment market, the technology risks associated with video delivery to the end user, its dependence on decisions made by the movie studios, and a highly leveraged capital structure. Recent performance reflects the constrained operating flexibility brought about by the company's limited liquidity. Revenues fell about 22% for the quarter ended June 30, 2009, because of lower inventory availability, a 34% drop in by-mail subscribers, and a decline in store count. Consolidated same-store sales fell 10.7% during the quarter. Although Standard&Poor's Ratings Services believes refinancing will enhance the company's liquidity position, we expect revenues to be challenged over the near term as working capital
