Blockbuster Inc.'s independent auditor has expressed doubts about the company's recently acquired MovieLink LLC unit.
PricewaterhouseCoopers LLP cited MovieLink's recurring losses from operations, negative cash flows and its roughly $145 million accumulated deficit as the basis of its going-concern opinion, which indicates doubt about the unit's viability, according to a filing by Blockbuster Wednesday with the Securities and Exchange Commission.
MovieLink, a service that allows consumers to download films from the Internet, had a $144.98 million accumulated deficit as of June 30, according to its financial statements attached to the SEC filing.
The company's net loss for the six months ended June 30 was $10.18 million, narrowing slightly from a $11.62 million loss in the first half of 2006. Revenue was $1.98 million during the six-month period, compared with $1.92 million a year earlier.
MovieLink was jointly owned by the major Hollywood studios before Blockbuster bought it in August for undisclosed terms.