PORTLAND, Ore. -- Rentrak, a shared-revenue, pay-per-transaction distributor here, has entered into an agreement to buy a controlling interest in Entertainment One, Effingham, Ill., which runs 46 Wal-Mart supercenter video departments.
Discussions about the possibility of Rentrak buying the other major operator of Wal-Mart video rental departments, Supercenter Entertainment Corp., Dallas, are under way as well, Rentrak Chairman Ron Berger told SN.
The Entertainment One agreement, expected to be executed sometime this month, would give Rentrak 57% stock ownership of Entertainment One.
Berger called the Entertainment One deal "an investment by Rentrak in the exciting Wal-Mart expansion."
Berger said independent research shows that a significant portion of Wal-Mart rental customers don't rent at video specialty stores. "These prime sales locations will enable Rentrak to expand its direct sales of new and used videos and games to consumers," he said.
Rentrak subsidiary Mortco entered into an agreement to buy control of Entertainment One in early May from majority shareholder and President Terry Monroe. Rentrak had bought a smaller stake in the company last year. Monroe is expected to remain with the company in a senior management role. Founded as C&M Video in 1983, Entertainment One now includes the 46 Wal-Mart departments, eight supermarket video departments and five video specialty stores. It plans to open 23 more Wal-Mart supercenter departments this year. Meanwhile, Supercenter Entertainment Corp. has been looking for local video dealers to buy some of the 66 departments it has in Wal-Mart and Kmart supercenters.
Jack Silverman, the company's president, said he would consider selling the entire company. But, in speculating on whether Rentrak would be the buyer, he said, "whether something will develop between Rentrak and myself is problematic." He did not elaborate.
He called the Rentrak deal with Entertainment One "another indication that the big boys want to get in on this supermarket video bonanza." A well-known figure in the video trade, Silverman founded distributor Commtron, and shared-revenue supplier SuperComm, Dallas. Commtron is now part of Ingram Entertainment, La Vergne, Tenn., and SuperComm is now a Disney subsidiary. Silverman also is a former member of the Rentrak board of directors. Silverman has been hoping to sell some of the departments he operates to video dealers in the same communities as the supercenters. When asked why he wants to sell, he said, "If I were five years younger, I wouldn't be doing this. I would be taking it public myself. But this is a monstrous job." Silverman said he is trying to reduce the financial burden of setting up video departments in the rapidly expanding number of supercenters.
Wal-Mart and Kmart expect to open hundreds of stores in the next three years, he said. "That's millions of dollars. I don't want to invest millions of dollars opening up these stores," he said.