(Reuters) - Dish Network the second-largest U.S. satellite TV company after DirecTV, won Blockbuster Inc in a bankruptcy auction for $320 million, further broadening its business beyond satellite TV and setting up a possible showdown with Netflix.

Dish said the deal, which includes more than 1,700 Blockbuster stores, covers "substantially all" of the rental chain's business, and likely gives Dish the rights Blockbuster had to stream movies over the Internet, the Blockbuster brand name and customer lists.

"This is very clever," said Todd Mitchell, an analyst with Kaufman Brothers. "Dish can transition Blockbuster from a retail to a streaming model so you have basically a Netflix-like offering."

When Blockbuster filed for bankruptcy in September it said it had about 1.3 million subscribers for its monthly or annual rental services. Dish is expected to continue to close Blockbuster stores, which have already been cut nearly in half during its six months in bankruptcy.

It is a dramatic fall for Blockbuster. Mail-order and then digital competitors have steadily eaten into its business, which at its peak in 2002 had a market value of $5 billion.

http://www.reuters.com/article/2011/...+Technology%29