Wedbush Morgan analyst Michael Pachter puts his skepticism plainly in analyst note, via Research Recap: “Not only are we skeptical about the potential for this vision to be realized, but we fail to see how Blockbuster has any competitive advantage in delivering content to these consumers.” This is the issue we noted yesterday, that it was unclear how Blockbuster could really bring a strong digital media service to Circuit City.

Others see the likely winner as Netflix (NSDQ: NFLX). Doug Anmuth, Lehman: “The acquisition of a major retail chain also highlights the growing divergence between the strategies of Blockbuster and Netflix.  While both are aiming to be preferred destinations for media content, Netflix remains largely a by-mail DVD delivery service that is making the slow but ultimately critical transition toward digital delivery.  The potential BBI-Circuit City deal emphasizes Blockbuster’s focus on traditional retail and could move Blockbuster further away from the DVD-by-mail business.” Jefferies & Co analyst Youssef Squali said much the same thing, reports AP, that by doubling down on retail, the Netflix seems to have avoided a direct competitor. And again, however things shake out, the issue is likely to be a major distraction to Blockbuster management.

One bit of positive news: Financing shouldn’t be an issue. In its response to the offer, Circuit City wondered how Blockbuster would really be able to drum up the cash. According to reports, Blockbuster shareholder Carl Icahn has promised to help finance the bid. As FT argues, the fact that Icahn is so solidly behind this deal—to the point that he’s willing to help finance it—bolsters the suspicion of many, that this must be more about nuts and bolts stuff, like real estate, than about heady visions of digital media convergence.