Blockbuster has withdrawn its bid to acquire Circuit City. Jim Keyes, Blockbuster Chairman and CEO, said the company’s decision was based on market conditions and the completion of “initial due diligence,” but said that he hasn’t given up on the dream of “a consumer retail proposition” that would marry content and devices “under one brand.”

Blockbuster Inc. announced today that it has decided to withdraw its proposal to acquire Circuit City.

“Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster’s shareholders to proceed with an acquisition of Circuit City,” said Jim Keyes, Blockbuster Chairman and CEO. “We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand. We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment.”