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Blockbuster UK set to fall back into administration

LONDON (Reuters) - Blockbuster's chain of film and computer game rental shops in Britain is set to go into administration, a form of bankruptcy protection, for the second time in 10 months after its private equity owner failed to turn the business around.

The firm's British shops originally fell victim to increased competition from supermarkets, the shift towards people watching films over the internet and a harsh economic backdrop.

Gordon Brothers Europe, which purchased Blockbuster for an undisclosed sum in March, said on Tuesday it was filing a notice of intention to appoint an administrator to the retailer, which trades from 264 stores and employs 2,000.

The firm said it had striven to turnaround the historically loss-making company by restructuring the business, investing in marketing activities and negotiating with the landlords of its retail outlets.

Gordon Brothers said it had also tried to develop a new digital platform but was unable to broker a licensing deal with Blockbuster UK's parent company in the United States.

"Regrettably, the months since the acquisition have also coincided with a period of poor trading performance across both rental and retail sales," it said, adding that the need to reduce costs whilst a buyer is sought will result in 32 redundancies at Blockbuster UK's head office.

All stores will continue to trade whilst a buyer is sought for the business.

Several British retailers collapsed in the economic downturn, including Woolworths, Comet, HMV and Jessops.

(Reporting by James Davey; editing by Rhys Jones)