Harvard Endowment Goes to the Movies

While the drama surrounding the University’s presidential search might not make for the biggest summer movie hit, the Harvard Management Company has a different sort of “blockbuster” in mind.

A filing with the Securities and Exchange Commission yesterday stated that, in the fiscal quarter ending December 31, 2006, Harvard acquired 5,773,889 shares of stock in Blockbuster Inc., comprising an eight percent share of the company.

This investment was worth $39.1 million at the close of trading yesterday, assuming Harvard has maintained its holdings in Blockbuster.

With the recent transaction, Harvard joins the ranks of investment firms such as Morgan Stanley, Merrill Lynch, and Barclays Global Investors in holding one of the largest chunks of Blockbuster stock.

Blockbuster has lagged behind rival Netflix in signing up customers for online subscriptions for video rentals, reporting only 2.2 million subscribers to its Total Access program in comparison to Netflix’s 6.3 million.

The company expects, however, that a recent marketing campaign, which kicked off with a 30-second Super Bowl ad last weekend, will promote the Total Access program and bolster Blockbuster’s market share.

The program attempts to compete with Netflix by allowing online customers to return or exchange films at actual stores—an option lacking in the purely online Netflix.

Blockbuster also announced a deal last November to acquire exclusive rights to U.S. rentals of all films from The Weinstein Co., founded by Bob and Harvey Weinstein after they sold their previous company, Miramax Films, to The Walt Disney Company.

This is not the first time that Harvard has procured such a large stake in a major firm.

In the quarter ending September 30, 2006, Harvard increased its holdings of Univision Communications Inc.—a Spanish-language television broadcaster—to become the 13th largest shareholder in the company.

—Staff writer Nathan C. Strauss can be reached at strauss@fas.harvard.edu.