RadioShack Prepares to Sell Stores to Sprint in Bankruptcy Deal

Companies May Co-Brand the Stores

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RadioShack is preparing to shut down the almost-century-old electronics chain in a bankruptcy deal that would sell about half its stores to Sprint and close the rest, according to people with knowledge of the discussions.

The locations sold to Sprint would operate under the wireless carrier's name, meaning RadioShack would cease to exist as a stand-alone retailer, said the people, who declined to be identified because the talks aren't public.

Still, the negotiations could break down without a deal being reached or the terms could change. Sprint and RadioShack also have discussed co-branding the stores, according to two of the people. It's also possible that another bidder could emerge that would buy RadioShack and keep it operating, the people said.

The retailer's tumultuous marketing past is peppered with triumphs and blunders -- from its comedic 2014 Super Bowl spot to its short-lived attempt to dub itself "The Shack" in 2009.

CMO Jennifer Warren, who was one of Ad Age's Women to Watch, has taken calculated risks with the brand's advertising since joining the company in 2013. She led the consolidation of the brand's marketing with GSD&M and brought some work in house to save money. She also led an aggressive rebranding that included a new tagline and brand platform aimed at positioning the company as a hub for the hottest technology. It featured a TV spot starring Robin Thicke -- inspired by his "Blurred Lines" video -- in a plug for Beats by Dre's Pill speaker, which was aimed at younger consumers.

The campaign was followed by a Super Bowl spot that flashed back to the 1980s, poking fun at the retailer's dated image in an effort to announce that it was remaking its stores, merchandise and image. The ad opened with this line: "The '80s called: They want their store back." It was a win creatively but did little to improve sales or prevent store closures.

Most recently, RadioShack tapped Weird Al Yankovic for a holiday push that presented the retailer as a destination for electronic gifts for everyone.

The company's marketing budget has declined in recent years. It spent $78 million on U.S. measured media in 2013, down from $88 million a year earlier, according to Kantar Media.

For its latest flagship promotion, Sprint is targeting Verizon and AT&T, offering switching subscribers half-off existing bills. The two larger carriers have invested heavily in retail recently, as the carriers search for new revenue streams in home automation and connected devices. The market share gap between the leaders and Sprint widened in 2014, as Sprint lost customers during a network overhaul. Sprint also spends less on marketing, with $1.6 billion in U.S. advertising in 2013, according to the Ad Age DataCenter.

RadioShack received a rescue financing package from Standard General LP in October, and the hedge fund would serve as the lead bidder in a filing and provide debtor-in-possession financing after filing, said the people. That would allow the investment firm to recoup some of the costs of the $535 million loan. Liquidating the stores also would let RadioShack avoid a battle with lenders over control of the company.

Merianne Roth, a spokeswoman for Fort Worth, Texas-based RadioShack, didn't have an immediate comment. David Glazek, a partner at Standard General, declined to comment. A Sprint spokesman declined to comment.

--With contributions from Bloomberg News and Mark Bergen--

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