Blockbuster’s net falls on costs to boost online store

Movie-rental company Blockbuster Inc. said Tuesday that its fourth-quarter earnings fell 28%, largely because of costs to launch and promote its online rental business.

The company also said it was trying to resolve a dispute with Chief Executive John Antioco over his 2006 bonus.

The board on Jan. 25 awarded Antioco a bonus of $2.28 million, on top of his 2006 salary and deferred compensation of about $2.5 million. According to a statement in the company’s earnings report, Antioco maintains he’s entitled to a bonus of $7.65 million, based on performance goals. The company has said it has set aside $4.5 million for this contingency.

Quarterly net income fell to $10 million, or 5 cents a share, compared with $18 million, or 9 cents, a year earlier.

The adjusted earnings were ahead of the 5 cents a share expected by analysts surveyed by Thomson Financial.

Revenue edged up 1% to $1.51 billion, surpassing Wall Street’s estimate of $1.47 billion.

Blockbuster shares dropped 27 cents to $6.67.

A big focus for the Dallas-based company has been its online rental program called Total Access, launched in November as a way to compete with online rental leader Netflix Inc.

Antioco said he expected Total Access to notch 3 million subscribers by the end of March, up from 2.2 million subscribers at the end of 2006. The company said it topped its goal of 2 million subscribers by the end of 2006.

Total Access allows customers to order movies online and return them through the mail or at their local Blockbuster store. In a research note, J.P. Morgan Securities called the 3-million-subscriber forecast “surprisingly positive guidance.”