Facing rising pressure from digital services such as iTunes and online services such as Netflix, Blockbuster (http://www.blockbuster.com) has initiated a process to sell the company, which it believes represents the best means of maximizing value for Blockbuster’s stakeholders.

In conjunction with this process, Blockbuster has entered into an asset purchase agreement with a “stalking horse” bidder, Cobalt Video Holdco, a limited liability company formed by funds managed by Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Värde Partners, each of which is a secured noteholder of the company.

In addition, Blockbuster has filed a motion seeking authorization from the U.S. Bankruptcy Court for the Southern District of New York to conduct an auction process for the company. Blockbuster expects that its U.S. operations, including a majority of its stores, DVD vending kiosks, by-mail and digital businesses, will continue to serve customers in the ordinary course during the sale process, says Chairman and CEO Jim Keyes.

The company’s international operations in Canada, Denmark, Italy, Mexico, and the United Kingdom are also expected to conduct business as usual during the sale process. Blockbuster franchise locations in both the U.S. and abroad are independently owned, operated and funded, and will also continue normal business operations.