Blockbuster Inc.'s play for rival Hollywood Entertainment was dealt another blow March 4 as the Federal Trade Commission said the video rental giant has provided "insufficient and inaccurate" informat

NEW YORK (The Hollywood Reporter) -- Blockbuster Inc.'s play for rival Hollywood Entertainment was dealt another blow March 4 as the Federal Trade Commission said the video rental giant has provided "insufficient and inaccurate" information about its proposed takeover deal.

The agency, which already has cleared an acquisition proposal by competitor Movie Gallery for Hollywood, said it has filed a motion in federal court to force Blockbuster to comply with antitrust law and turn over more documents.

But a Blockbuster spokesman said March 4 that the company felt it has given the FTC all requested information and has "corrected" a technical issue related to certain information.

The FTC's court move "is a diversionary tactic ... that will not affect our efforts to acquire Hollywood Entertainment," the spokesman said, adding that Blockbuster is now waiting for timetable clarity as to when a regulatory waiting period ends for it. Blockbuster has said it will be free to consummate a takeover of Hollywood as of March 4.

But a judge has set a preliminary hearing for March 10 to decide on the FTC's request to force Blockbuster to stay away from a deal for now. The FTC said in a statement that Blockbuster is prohibited "from proceeding with the acquisition until 30 days from the date that it has substantially complied" with the agency's second information request.

A Blockbuster source said the firm feels it doesn't have the luxury of that time. The firm hopes the hearing will clarify when it can move ahead on its planned takeover play.

McAlpine Associates founder and analyst Dennis McAlpine said the FTC is seeming to drag out the process, "so that Movie Gallery might complete its offer for Hollywood and therefore make moot the need for the FTC to decide one way or the other on the antitrust status of a Blockbuster-Hollywood combination."

Overall, "it does appear that Blockbuster is in for a tough fight with the FTC before it is allowed, if it ever is, to actually make a bid for Hollywood," McAlpine said. "We think the scale has tilted in favor of Movie Gallery."