Blockbuster & RadioShack Announce Strategic Alliance.

Blockbuster Inc. and RadioShack Corporation announced a strategic alliance that will introduce a RadioShack store-within-a-store concept inside Blockbuster locations. The intent of the alliance is to create a full-service home entertainment destination within Blockbuster, while increasing RadioShack’s reach to more consumers, more frequently and expanding their distribution network.

“This alliance brings Blockbuster, the leading home-entertainment brand, together with the leading brand in consumer electronics to benefit our customers by giving them neighborhood, one-stop shopping for the best selection of entertainment and electronic products and services,” said John Antioco, chairman and chief executive officer of Blockbuster. “We’re combining Blockbuster’s domestic customer base of 48 million active member accounts and premiere store distribution network with RadioShack’s high-quality products and expert electronics sales personnel. The results will be an extensively expanded home entertainment selection for our customers and entirely new revenue streams for Blockbuster with limited capital expenditures.”

“Having a retail presence in as many of the 5,000 Blockbuster stores as possible nationwide opens up a new distribution channel for RadioShack, creating an enormous opportunity for accelerated growth,” said Leonard Roberts, chairman and chief executive officer of RadioShack Corporation. “Our alliance with Blockbuster provides us access to more than 3 million Blockbuster customers each day, including more women and young adults, while using a capital efficient way to expand our square footage and distribution network.

The companies will launch Phase I of the concept in approximately 130 selected Blockbuster stores in four markets, which is planned to be followed by a Phase II nationwide rollout of the company’s remaining stores in 2002. Completion of the approximate 130 stores is expected by this summer and will include the markets of Las Vegas, Nev., Norfolk, Va., Austin, Texas, and Tulsa, Okla. RadioShack’s highly trained sales associates will manage the stores within Blockbuster, which will offer and educate consumers on the latest digital entertainment products including home electronics, telephony services, high-speed Internet access and emerging connectivity technologies along with other fun gadgets.

The size of the RadioShack merchandising areas will vary depending on the size of the participating Blockbuster store, but will range from approximately 600-square-foot sections to kiosks. A wide selection of RadioShack’s most popular product and service offerings will be featured; however, specific inventory for the stores will be determined as the program moves forward.

Beginning with the rollout of Phase I, RadioShack will operate the store-within-a-store and pay a license fee to Blockbuster for each location. Both companies will share in the cash flow and other economic benefits.

In-store marketing campaigns and cross-promotional opportunities will be coordinated by Blockbuster and RadioShack. Both companies will work together to maximize synergies, drive additional sales and generate cost savings by managing vendor and service company relationships.