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The video-rental store is doomed, and even Blockbuster has figured that much out. That's why CEO Jim Keyes is trying to buy Circuit City for more than $1 billion? Blockbuster has become the RadioShack of its time, saddled with too many stores which are too small, selling the wrong thing. It jumped on the business of selling DVDs, instead of renting them, right as disc sales peaked and started to drop. Now, it hopes to sell, via Circuit City's larger outlets, subscriptions to its online video services alongside the devices used to play them. The vision is inspired by Apple, which sells iPods, Apple TV set-tops, and music and video through iTunes. Apple's iTunes movie rentals are a direct threat to Blockbuster's remaining rental business, and Apple is rumored, too, to be getting into the business of music subscriptions. One small problem: It's not clear how Circuit City helps Blockbuster.

Joseph Weisenthal at PaidContent deftly pinpoints the hole in Keyes's theory: Circuit City has already tried selling media subscriptions at the checkout before, with Napster, and it hasn't worked. Retail is a ruthlessly competitive business, one at which neither Blockbuster nor Circuit City has shown particular skill. Wal-Mart, Best Buy, and Target will easily scoop up this combination's customers while it tries to make a poorly thought-out strategy work. Wall Street recognizes that much, which is why Blockbuster's shares are sinking. When will Keyes, who has quietly pursued this merger since December, and is just now taking the effort public, get the message? (Photo by David Pellerin/AP)