September 24, 2025 • 10 mins
On this episode of Our American Stories, Blockbuster was once the king of video rental stores, with thousands of locations across the world. At its peak, the company even had the chance to buy Netflix. Former Blockbuster CEO Jim Keyes tells the story of how close the company came to surviving, and why it ultimately became a case study in missed opportunities.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
And we're back with our American stories. And as you know,
some of our favorite stories to tell are business stories
American dreams stories. And today we bring you another business
story from Jim Keys. We've already told two stories with
Jim about his childhood and the story of becoming the
CEO of seven to eleven. Today Jim tells us the
(00:30):
story of becoming the CEO of another company we all
know and love. Joey Cortez brings us today's story.
Speaker 2 (00:39):
In two thousand and five, Jim Keyes received the Horatio
Alger Award, joining the ranks of Rich DeVos, Buzz Aldrin,
Hank Aaron, and many more Americans who exemplified great virtue
and perseverance. The award was well deserved. As you might
have heard in our previous stories with Jim, he came
from nothing, worked at mc donald's and would become the
(01:01):
CEO of seven to eleven and successfully brought them out
of bankruptcy. Turns out Jim had a real talents for
turning companies around, a talent needed by another company in Peril,
a company that holds a special place in all of
our hearts.
Speaker 3 (01:19):
I started looking for similar opportunities I saw in Blockbuster
a very similar environment. Hard to see that on the surface,
but they had small box stores, yes, but really what
they were in the business of is convenience.
Speaker 4 (01:32):
So people were.
Speaker 3 (01:32):
Saying, well, the Blockbuster store is going to go away.
I never saw them as being a video rental store.
I saw them as being a convenient access to media
entertainment store.
Speaker 5 (01:43):
So it's in fact just another form of convenience.
Speaker 3 (01:47):
I also saw the technology that was coming wasn't quite
here yet for the ability to stream movies, to have.
Speaker 4 (01:54):
The access via the internet.
Speaker 3 (01:56):
Now, the capability wasn't there, the infrastructure wasn't there, but
the potential was. So my objective in taking on Blockbuster
was to first make the stores better. This created a
false perception that all I cared about was the store.
Is not true because first thing we had to do
was write the cash flow of the company, and cash
flow of the company was suffering.
Speaker 4 (02:16):
Stock was suffering.
Speaker 3 (02:18):
The week I got there, they violated a bank covenant,
so they were not satisfying their financial obligations. So job one,
write the ship, get the stores to be more productive,
and then step two build that digital future for the company.
So that was my objective, and all was going actually
quite well the first year I joined the company in
(02:41):
mid two thousand and seven. By the third quarter of
two thousand and eight, I had one full year under
my belt. We had significant increase in sane store sales.
We bought a streaming video company called Movielink, and we.
Speaker 4 (02:55):
Were very well positioned.
Speaker 3 (02:56):
We had already a by mail business and an offering
total access, so that customers could get our movies anyway.
Speaker 4 (03:03):
They want, by mail, via.
Speaker 3 (03:04):
A kiosk in the stores, or via streaming, so it
was a very good offering. Unfortunately, again back to the
adversity thing. Sometimes I think that black cloud maybe just
follows me around that I have to keep reminding myself
this is potentially there's going to be a silver lining
on the other side of this. But at Blockbuster in
(03:25):
two thousand and eight, everyone forgets that Lehman Brothers collapsed.
We were in the midst of a worldwide financial crisis.
The banks were virtually shut down, and Blockbuster at a
billion dollars of debt, of which a third was due
to be refinanced in.
Speaker 5 (03:41):
Two thousand and nine.
Speaker 4 (03:44):
So I had little choice in.
Speaker 3 (03:49):
Shifting from transformation mode to survival mode for Blockbusters. So
we had to pull back, retrench, try to finance the
debt and make it through this financial crisis, and ultimately.
Speaker 4 (04:05):
We started looking.
Speaker 3 (04:06):
For partners distribution partners. Google was a very high potential partner.
We were very close to a deal with Google that
would have put us side by side with YouTube. So
imagine everything paid for TV or movie would be Blockbuster
and everything free would be YouTube under the Google manner.
That would have been a huge differentiator. We had an
(04:29):
opportunity at one point to lock up the content that
Netflix started streaming.
Speaker 4 (04:35):
We could have gotten it exclusively for one hundred million
dollars a year.
Speaker 3 (04:39):
Of course, a company only eight one hundred and eighty
at the time in EBITDA, so it would have consumed
a lot of our cash flow.
Speaker 4 (04:45):
It was a very high risk proposition.
Speaker 3 (04:48):
We didn't take that exclusive deal at the time, thinking
that we could do it later, and we missed a
window of opportunity there. So there are a couple of
decisions I would like to have back if we could,
But with the information we had the time, with what
we knew at the time, we did the best that
we could.
Speaker 4 (05:07):
We like to believe we would have.
Speaker 3 (05:08):
Been far better off for the consumer a far better
alternative for the consumer than Netflix because you think about
the difference that Blockbuster was.
Speaker 4 (05:17):
Netflix from the.
Speaker 3 (05:18):
Beginning was a purveyor of older movies, older content. That's
really how they made their money. When they started streaming,
they had no new.
Speaker 4 (05:26):
Releases at all. Blockbuster Store had new movies, old movies,
TV shows.
Speaker 3 (05:31):
We were the aggregator of anything anybody wanted to see,
rather than offer a small sliver of all you can
eat entertainment. And so we like to believe that we
would be what doesn't exist today, which is the one
stop shop you want to see a movie. Doesn't matter
what movie it is. We want to see Top Gun
or Paul Blart, Mall Coop, you know, go to the
(05:53):
Blockbuster icon and you'd be able to find it. That
was what we were building with the acquisition of Movielink.
It gave us all of the new releases with the
acquisition of the long tail content that we also could
have acquired when we bought movie Link.
Speaker 4 (06:09):
That would have given us both new releases, old movies.
Speaker 5 (06:11):
And TV shows.
Speaker 3 (06:12):
The only thing we didn't do at the time, and
no one was doing it, was creating new content, which
we could have evolved into but you know again, it's
one of those would have could opportunities. A story I
like to share. I ran into to Warren Buffett at
Bill Gateshouse of all Things. I was invited to a
Microsoft CEO summit, and so I was a bit starstruck.
Speaker 5 (06:35):
I'm walking, I'm looking around.
Speaker 3 (06:36):
There's Bezos's Gates, there's you know, all these people. Warren
Buffett's there at the buffet getting shrimped. I thought, okay,
so I introduced myself, said hi, Warren, jim Key, is
nice to meet you, and he said, I know, I know,
I remember you from seven to eleven and he sent
me a nice note when I was inducted into Ratio
alger In fact, see that plaque over there, Calvin Coolidge.
Speaker 4 (06:57):
See press on.
Speaker 5 (07:00):
That plaque. That very plaque came from my McDonald's. They
let me take it home. I took it to high
school shop.
Speaker 3 (07:09):
Class or art class, and did a de coupage on
that little plaque that you see, and it's been on
my desk ever since. It's Calvin's Coolidge quote, Calvin Coolidge's
quote about persistence. The plaque says, press on. Nothing in
the world can take the place of persistence, talent will not.
Nothing is more common than unsuccessful men with talent genius
(07:30):
will not. Unrewarded genius is almost a proverb.
Speaker 4 (07:33):
Education alone will not. The world is full of educated derelicts.
Speaker 3 (07:38):
Persistence and determination alone are omnipotent.
Speaker 5 (07:45):
Now, that was a quote by Calvin Coolidge, the same.
Speaker 3 (07:49):
Quote when I first was inducted into Ratio Alger. Warren
Buffett sent me his biography. Very nice and nice vote
from Warren in it. He's also a Horatio algeb member.
And I'm flipping through the book and an entire chapter
of the book was one page. It was not only
(08:10):
that quote, it was the same script. I don't know
if he also worked at McDonald's and it off the
wall from the poster or what, but it was exactly
the same script in the book that he sent me.
So I've always been a Warren Buffett fan, and I
was able to share with him that we shared in
(08:30):
common Columbia University and a belief in this Calvin Coolidge
quote that persistence and determination are omnipotent. So back to
my story, So I run into Warren Buffett. He remembered
me from Horatio Algron from seven eleven He said, so,
what are you doing now? And I told him that
(08:50):
I had made the move to a Blockbuster.
Speaker 5 (08:53):
He's, oh, yeah, yeah, yeah, I think I remember that.
Speaker 3 (08:55):
And this is right around two thousand and eight, when
the financial markets were collapse, seeing it, we were just
getting crushed by the press and by you know, perception
that Blockbuster was going to have to file. And I said,
you know, Warren, I may have made a big mistake.
This was you know, I had such a good run
at seven eleven, and I took this on so frustrating,
(09:16):
and I don't know if I should stay or go,
and you know, I'm not sure what to do. And
he and he looked at me. He said, Jimmy, you're kidding.
He said, you're in the game. Said would you rather
be on the on the bench watching somebody else doing this,
or would you rather be at bat? Said yeah, see
you got knocked down, Get up, dust yourself off, get
(09:37):
back in there. He said, it's far better to be
in the game. Take another swing.
Speaker 4 (09:43):
What do you get to lose? And I literally took
that advice.
Speaker 3 (09:47):
I walked away from there feeling so much better, a
little embarrassed that I was playing the victim, myself, so
my own advice about adversity and dealing with challenges, and
I decided to stay. The easy answer would have been,
I didn't create this problem. I'm out of here right.
I stayed, saw the company through a successful restructuring. We
got the company sold a Dish. I was able to
keep the stores open, save nineteen thousand jobs, and felt
(10:11):
so much better that I wasn't a quitter, that I
didn't bail.
Speaker 5 (10:16):
Now, could it have better, a better outcome.
Speaker 3 (10:17):
Could we have sold to Google instead of Dish, restructured
around a digital network.
Speaker 4 (10:22):
Yes, I wish.
Speaker 3 (10:23):
But still I feel good about the outcome because ultimately
I know I did the right thing, And I credit
some of that to Warren Buffett running into him in
a fortuitous way that one day.
Speaker 1 (10:39):
Jim Keyes's story here on Our American Stories
And we're back with our American stories. And as you know,
some of our favorite stories to tell are business stories
American dreams stories. And today we bring you another business
story from Jim Keys. We've already told two stories with
Jim about his childhood and the story of becoming the
CEO of seven to eleven. Today Jim tells us the
(00:30):
story of becoming the CEO of another company we all
know and love. Joey Cortez brings us today's story.
Speaker 2 (00:39):
In two thousand and five, Jim Keyes received the Horatio
Alger Award, joining the ranks of Rich DeVos, Buzz Aldrin,
Hank Aaron, and many more Americans who exemplified great virtue
and perseverance. The award was well deserved. As you might
have heard in our previous stories with Jim, he came
from nothing, worked at mc donald's and would become the
(01:01):
CEO of seven to eleven and successfully brought them out
of bankruptcy. Turns out Jim had a real talents for
turning companies around, a talent needed by another company in Peril,
a company that holds a special place in all of
our hearts.
Speaker 3 (01:19):
I started looking for similar opportunities I saw in Blockbuster
a very similar environment. Hard to see that on the surface,
but they had small box stores, yes, but really what
they were in the business of is convenience.
Speaker 4 (01:32):
So people were.
Speaker 3 (01:32):
Saying, well, the Blockbuster store is going to go away.
I never saw them as being a video rental store.
I saw them as being a convenient access to media
entertainment store.
Speaker 5 (01:43):
So it's in fact just another form of convenience.
Speaker 3 (01:47):
I also saw the technology that was coming wasn't quite
here yet for the ability to stream movies, to have.
Speaker 4 (01:54):
The access via the internet.
Speaker 3 (01:56):
Now, the capability wasn't there, the infrastructure wasn't there, but
the potential was. So my objective in taking on Blockbuster
was to first make the stores better. This created a
false perception that all I cared about was the store.
Is not true because first thing we had to do
was write the cash flow of the company, and cash
flow of the company was suffering.
Speaker 4 (02:16):
Stock was suffering.
Speaker 3 (02:18):
The week I got there, they violated a bank covenant,
so they were not satisfying their financial obligations. So job one,
write the ship, get the stores to be more productive,
and then step two build that digital future for the company.
So that was my objective, and all was going actually
quite well the first year I joined the company in
(02:41):
mid two thousand and seven. By the third quarter of
two thousand and eight, I had one full year under
my belt. We had significant increase in sane store sales.
We bought a streaming video company called Movielink, and we.
Speaker 4 (02:55):
Were very well positioned.
Speaker 3 (02:56):
We had already a by mail business and an offering
total access, so that customers could get our movies anyway.
Speaker 4 (03:03):
They want, by mail, via.
Speaker 3 (03:04):
A kiosk in the stores, or via streaming, so it
was a very good offering. Unfortunately, again back to the
adversity thing. Sometimes I think that black cloud maybe just
follows me around that I have to keep reminding myself
this is potentially there's going to be a silver lining
on the other side of this. But at Blockbuster in
(03:25):
two thousand and eight, everyone forgets that Lehman Brothers collapsed.
We were in the midst of a worldwide financial crisis.
The banks were virtually shut down, and Blockbuster at a
billion dollars of debt, of which a third was due
to be refinanced in.
Speaker 5 (03:41):
Two thousand and nine.
Speaker 4 (03:44):
So I had little choice in.
Speaker 3 (03:49):
Shifting from transformation mode to survival mode for Blockbusters. So
we had to pull back, retrench, try to finance the
debt and make it through this financial crisis, and ultimately.
Speaker 4 (04:05):
We started looking.
Speaker 3 (04:06):
For partners distribution partners. Google was a very high potential partner.
We were very close to a deal with Google that
would have put us side by side with YouTube. So
imagine everything paid for TV or movie would be Blockbuster
and everything free would be YouTube under the Google manner.
That would have been a huge differentiator. We had an
(04:29):
opportunity at one point to lock up the content that
Netflix started streaming.
Speaker 4 (04:35):
We could have gotten it exclusively for one hundred million
dollars a year.
Speaker 3 (04:39):
Of course, a company only eight one hundred and eighty
at the time in EBITDA, so it would have consumed
a lot of our cash flow.
Speaker 4 (04:45):
It was a very high risk proposition.
Speaker 3 (04:48):
We didn't take that exclusive deal at the time, thinking
that we could do it later, and we missed a
window of opportunity there. So there are a couple of
decisions I would like to have back if we could,
But with the information we had the time, with what
we knew at the time, we did the best that
we could.
Speaker 4 (05:07):
We like to believe we would have.
Speaker 3 (05:08):
Been far better off for the consumer a far better
alternative for the consumer than Netflix because you think about
the difference that Blockbuster was.
Speaker 4 (05:17):
Netflix from the.
Speaker 3 (05:18):
Beginning was a purveyor of older movies, older content. That's
really how they made their money. When they started streaming,
they had no new.
Speaker 4 (05:26):
Releases at all. Blockbuster Store had new movies, old movies,
TV shows.
Speaker 3 (05:31):
We were the aggregator of anything anybody wanted to see,
rather than offer a small sliver of all you can
eat entertainment. And so we like to believe that we
would be what doesn't exist today, which is the one
stop shop you want to see a movie. Doesn't matter
what movie it is. We want to see Top Gun
or Paul Blart, Mall Coop, you know, go to the
(05:53):
Blockbuster icon and you'd be able to find it. That
was what we were building with the acquisition of Movielink.
It gave us all of the new releases with the
acquisition of the long tail content that we also could
have acquired when we bought movie Link.
Speaker 4 (06:09):
That would have given us both new releases, old movies.
Speaker 5 (06:11):
And TV shows.
Speaker 3 (06:12):
The only thing we didn't do at the time, and
no one was doing it, was creating new content, which
we could have evolved into but you know again, it's
one of those would have could opportunities. A story I
like to share. I ran into to Warren Buffett at
Bill Gateshouse of all Things. I was invited to a
Microsoft CEO summit, and so I was a bit starstruck.
Speaker 5 (06:35):
I'm walking, I'm looking around.
Speaker 3 (06:36):
There's Bezos's Gates, there's you know, all these people. Warren
Buffett's there at the buffet getting shrimped. I thought, okay,
so I introduced myself, said hi, Warren, jim Key, is
nice to meet you, and he said, I know, I know,
I remember you from seven to eleven and he sent
me a nice note when I was inducted into Ratio
alger In fact, see that plaque over there, Calvin Coolidge.
Speaker 4 (06:57):
See press on.
Speaker 5 (07:00):
That plaque. That very plaque came from my McDonald's. They
let me take it home. I took it to high
school shop.
Speaker 3 (07:09):
Class or art class, and did a de coupage on
that little plaque that you see, and it's been on
my desk ever since. It's Calvin's Coolidge quote, Calvin Coolidge's
quote about persistence. The plaque says, press on. Nothing in
the world can take the place of persistence, talent will not.
Nothing is more common than unsuccessful men with talent genius
(07:30):
will not. Unrewarded genius is almost a proverb.
Speaker 4 (07:33):
Education alone will not. The world is full of educated derelicts.
Speaker 3 (07:38):
Persistence and determination alone are omnipotent.
Speaker 5 (07:45):
Now, that was a quote by Calvin Coolidge, the same.
Speaker 3 (07:49):
Quote when I first was inducted into Ratio Alger. Warren
Buffett sent me his biography. Very nice and nice vote
from Warren in it. He's also a Horatio algeb member.
And I'm flipping through the book and an entire chapter
of the book was one page. It was not only
(08:10):
that quote, it was the same script. I don't know
if he also worked at McDonald's and it off the
wall from the poster or what, but it was exactly
the same script in the book that he sent me.
So I've always been a Warren Buffett fan, and I
was able to share with him that we shared in
(08:30):
common Columbia University and a belief in this Calvin Coolidge
quote that persistence and determination are omnipotent. So back to
my story, So I run into Warren Buffett. He remembered
me from Horatio Algron from seven eleven He said, so,
what are you doing now? And I told him that
(08:50):
I had made the move to a Blockbuster.
Speaker 5 (08:53):
He's, oh, yeah, yeah, yeah, I think I remember that.
Speaker 3 (08:55):
And this is right around two thousand and eight, when
the financial markets were collapse, seeing it, we were just
getting crushed by the press and by you know, perception
that Blockbuster was going to have to file. And I said,
you know, Warren, I may have made a big mistake.
This was you know, I had such a good run
at seven eleven, and I took this on so frustrating,
(09:16):
and I don't know if I should stay or go,
and you know, I'm not sure what to do. And
he and he looked at me. He said, Jimmy, you're kidding.
He said, you're in the game. Said would you rather
be on the on the bench watching somebody else doing this,
or would you rather be at bat? Said yeah, see
you got knocked down, Get up, dust yourself off, get
(09:37):
back in there. He said, it's far better to be
in the game. Take another swing.
Speaker 4 (09:43):
What do you get to lose? And I literally took
that advice.
Speaker 3 (09:47):
I walked away from there feeling so much better, a
little embarrassed that I was playing the victim, myself, so
my own advice about adversity and dealing with challenges, and
I decided to stay. The easy answer would have been,
I didn't create this problem. I'm out of here right.
I stayed, saw the company through a successful restructuring. We
got the company sold a Dish. I was able to
keep the stores open, save nineteen thousand jobs, and felt
(10:11):
so much better that I wasn't a quitter, that I
didn't bail.
Speaker 5 (10:16):
Now, could it have better, a better outcome.
Speaker 3 (10:17):
Could we have sold to Google instead of Dish, restructured
around a digital network.
Speaker 4 (10:22):
Yes, I wish.
Speaker 3 (10:23):
But still I feel good about the outcome because ultimately
I know I did the right thing, And I credit
some of that to Warren Buffett running into him in
a fortuitous way that one day.
Speaker 1 (10:39):
Jim Keyes's story here on Our American Stories
Host
Lee Habeeb
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