Item 2.06. Material Impairments.

In April 2011, we completed the acquisition of most of the assets of Blockbuster, Inc. (the "Blockbuster Acquisition"), which we report as our Blockbuster segment in our public filings with the SEC. As part of the Blockbuster Acquisition, we acquired Blockbuster operations in the United States and certain foreign countries, including the operations of Blockbuster in the United Kingdom ("Blockbuster UK"). On January 16, 2013, Blockbuster Entertainment Limited and Blockbuster GB Limited, the Blockbuster UK operating subsidiaries in the United Kingdom (collectively, the "Blockbuster UK Operating Entities"), entered into administration proceedings in the United Kingdom (the "Administration"). Administrators have been appointed to sell or liquidate the assets of the Blockbuster UK Operating Entities for the benefit of their creditors. Since we no longer exercise control and the administrators now exercise control over all operating decisions for the Blockbuster UK Operating Entities, we will be required to deconsolidate Blockbuster UK during the first quarter 2013.

As a result of the Administration, we are required to write down the assets of Blockbuster UK to their estimated net realizable value as of December 31, 2012, which resulted in a charge of $21 million. Furthermore, we have intercompany receivables due from Blockbuster UK of $37 million as of December 31, 2012. We currently believe that we will not receive the entire amount for these intercompany receivables in the Administration. Accordingly, we concluded on February 12, 2013 that we will be required to record a $25 million impairment charge related to these intercompany receivables, to adjust this amount to their estimated net realizable value for the year ended December 31, 2012. As of February 12, 2013, in total, we have determined that we will record charges described above totaling $46 million on a pre-tax basis on our Consolidated Statement of Operations for the year ended December 31, 2012 related to the Administration. The proceeds that we will actually receive from the Administration and the actual impairment charge may differ from our estimates.

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