Say anything long enough and loud enough, the old adage goes, and people will believe it.

That approach seemed to be Enron's public relations policy. Case in point: a brief alliance last year with video chain Blockbuster, Inc., in which the two companies planned to offer entertainment-on-demand (EOD) over Enron's expanding broadband network. Despite previous failed experiments in EOD by other companies, Enron execs extracted maximum PR mileage from the project as a further example of their visionary omniscience, encompassing distantly related businesses throughout the planet. Businessmen as sophisticated as Oracle Corporation chairman Larry Ellison took the bait. Ellison committed $2 million and an undisclosed amount of computer hardware to the project.

In midyear 2000, the partners announced an agreement to conduct joint testing of a prototype EOD system, with chairman Kenneth Lay hyping it as "the killer app for the entertainment industry," and promising the dawning availability of thousands of movies over telephone lines. By December, they had launched a small-scale experiment with about 1000 subscribers—most of them non-paying volunteers—in four US cities: New York; Seattle; Portland, OR; and American Fork, UT. But by March 2001, with the tests still under evaluation, Enron and Blockbuster called off their deal.

The outlay for the experiment was so small—and its results so inconclusive—that Blockbuster never even bothered to put it on the books. "It was nothing but a pilot project," Blockbuster spokeswoman Karen Raskopf told Rebecca Smith of the Wall Street Journal. Enron inexplicably expected instant profits, she said, from what Blockbuster officials then believed was the seed of a 20-year plan to remake the entertainment industry's distribution model, and called off further development when Blockbuster was unable to generate support in Hollywood. "The exclusive relationship has not yielded the quantity and quality of movies needed to drive demand for this new on-demand service," Kenneth Lay stated at the time. "We validated our ability to deliver content on-demand through the trial, and now Enron wants to take our service to the next level by adding content and subscribers on an accelerated basis."

Enron envisioned a nationwide EOD service with millions of subscribers in 20 months, not 20 years—not a very realistic expectation, in the view of Blockbuster executives. Unknown to them was the fact that Enron was leveraging its EOD experiment into huge loans and phony profits—part of a large pattern of what has been politely called "accounting irregularities." Among them: a $115.2 million investment in "Project Braveheart" (Enron's code name for the EOD venture) by CIBC World Markets, a division of the Canadian Imperial Bank of Commerce in Toronto. The lure for CIBC was "the promise of almost all earnings from Enron's share of the venture for the first 10 years," Smith reported.

Funny, yes? Here's the real punch line: Enron was able to loosen the purse strings at CIBC by claiming $110.9 million in profits in the fourth quarter of 2000 and the first quarter of 2001 from its EOD operation—the same one classified by Blockbuster as too insignificant to list in its profit and loss statement. "I don't know how anyone could have been booking revenues," Raskopf said in astonishment. Further funny business: In December 2000, Enron incorporated the "Braveheart" venture in the state of Delaware under the name EBS Content Systems LLC. The fledgling—and soon to be defunct—venture was assigned a value of $124.8 million based on revenue and earnings projections. It in turn became another phony asset that Enron used to prop itself up.

Enron's financial shenanigans finally caught up with it in the fall of 2001. What had been the seventh-biggest company in the United States became the biggest collapsing house of cards in the history of the world.