Blockbuster Returns to the Black

Blockbuster Inc. returned to the black in the third quarter, earning a $51-million profit that nonetheless fell short of the video chain’s expectations because of higher marketing costs and additional money spent to add more DVDs and video games to its stores.

The results contrast with a year-earlier loss of $224.9 million stemming from write-downs as it continues clearing out videocassettes to make room for higher-profit DVDs and video games. Revenue in the quarter rose 9.6%, to $1.39 billion from $1.26 billion.

The Dallas-based firm, which is 82%-owned by entertainment giant Viacom Inc., said it was disappointed with the per-share earnings of 28 cents, 3 cents short of Wall Street projections.

Blockbuster has been spending more on marketing, in part to launch rental and sales programs to meet competition from stores such as Wal-Mart and Best Buy that are aggressively selling DVDs to consumers.

But in a conference call Tuesday, Blockbuster Chief Executive John Antioco promised a “great” fourth quarter and a strong first quarter next year. One reason: the upcoming release on DVD and video of such films as “Spider-Man,” “Men in Black 2,” and “Minority Report.”

Salomon Smith Barney analyst Margaret Blaydes said she expects the company’s stronger sales but lower profit margins to continue.

For the nine months, Blockbuster posted a $1.66-billion loss, the result of a noncash adjustment stemming from new accounting rules on the treatment of acquisitions. Revenue rose 4.9% to $3.98 billion.

Blockbuster’s shares fell $1.21 to $24.42 on the New York Stock Exchange.