Chief Executive James Keyes said in a statement today that based on market conditions and the completion of its due diligence process, the company decided it wasn't in the best interest of Blockbuster shareholders to acquire Richmond, Va.-based Circuit City.

Keyes says Blockbuster still believes in the merits of bringing media content and electronic devices together under one brand, and the company will pursue that strategy through its stores "as a way to diversify the business and better serve the entertainment retail segment."

Blockbuster announced a bid of more than $1 billion for Circuit City in April, with plans to create a 9,300-store chain that could sell portable devices and entertainment for them.