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Blockbuster names ex-7-Eleven chief as CEO

New Blockbuster Chairman and CEO James Keyes
New Blockbuster Chairman and CEO James Keyes AP
/ Source: The Associated Press

Blockbuster named James W. Keyes, former president and chief executive officer of 7-Eleven, as the chairman and chief executive officer of the struggling movie rental company Monday.

Keyes, 52, replaces John F. Antioco, who announced in March that he would leave by the end of the year after nearly a decade leading the Dallas company.

Blockbuster has been fighting for survival as consumers increasingly look online to companies like Netflix Inc. for movies.

“As the technology continues to evolve it will be my job to have Blockbuster front and center as a player in those areas of technology,” Keyes said.

Keyes, who was with 7-Eleven for 21 years, retired when the convenience store chain was sold in 2005 and has since served as chairman of Key Development LLC, a private investment company.

In May, Blockbuster said its first-quarter loss widened because of a soft market for movie rentals and heavy spending on its online rental program, which now competes with Netflix.

Last fall, Blockbuster introduced its “Total Access” plan, which gives its online subscribers the option of returning DVDs to a store instead of through the mail to obtain another movie more quickly.

“They created this Total Access carrot where you’re getting people into the stores, now you need them to spend money,” said Rick Munarriz, a senior analyst at The Motley Fool.

“The big problem with Blockbuster is it can’t become the place where people go to get movies,” he said. “That’s a dying business model if you look at it in that sense.”

He said that because of his retail experience, Keyes is a good choice for Blockbuster.

“I don’t know if Blockbuster can be saved, but if it can, it will be with someone like this,” Munarriz said.

Arvind Bhatia, director of equity research at Sterne, Agee & Leach, said that during Keyes’ tenure at 7-Eleven, the company did well financially.

“Our first read is this is good for Blockbuster and this is good for its stock price,” Bhatia said.

Blockbuster has more than 8,000 stores worldwide, about 5,000 in the U.S. The company said last week that it will close 282 U.S. stores this year, which Keyes described as a normal progression for a major retailer.

“The stores themselves remain one of Blockbusters strongest competitive advantages,” Keyes said.

Netflix settled a patent infringement lawsuit against Blockbuster last week, ending an attempt to slow the growth of Blockbuster’s online business. Terms were confidential.

Keyes, who has a three-year contract, will receive an annual salary of at least $750,000 and a bonus of at least $500,000, according to a regulatory filing with the Securities and Exchange Commission.

Keyes will also be issued $3 million in shares that will vest in full on the third anniversary of his start date. Keyes also agreed to buy $3 million in shares within 30 days after starting at the company.

Antioco’s last day was Monday, but he’ll be available to help with the transition, a company spokeswoman said.