Company cites "No Late Fees" program as a culprit.

Blockbuster is reporting a $57.5 million net loss for the first quarter of the year.

The company says that the primary culprits were costs relating to the "No Late Fees" program, and one-time costs associated with its failed bid for Hollywood Entertainment Corp.

Last year, the chain had a net income of $114.4 million in the first quarter.

Total revenues for the first quarter increased 3% to $1.55 billion, compared to $1.5 billion total revenues in 2004, due to an increase in retail sales of both movies and games. Retail revenues increased 28.7% to $425.9 million compared to $330.9 million in the first quarter of 2004.

Rental revenues decreased 4% to $1.11 billion from $1.15 billion in the first quarter of 2004 because of the "No Late Fees" program, which launched in January.

Blockbuster projects that total revenues in 2005 will be in the mid-single digit range compared to 2004.

It reports that the $250 to $300 million that extended viewing fees would have contributed to operating income this year, will be offset by increased store traffic and less promotional activity.