As always, the success or failure of the union depends on the quality of management. On the surface, however, it makes some sense to me. Blockbuster needs to diversify away from its disintegrating core business and Circuit City needs new management to become a viable competitor in the marketplace. This acquisition does both of these things. Will it make the two stronger? Only time and management talent will tell.
As a small business entrepreneur, I can tell you that I have a fairly jaded opinion of most big business managements. The people who get into the highest levels of management in large companies are those with the right politics, not necessarily the right ideas. In some cases, the lower management substitutes and in some cases (like with these two companies) it doesn't. Best of luck to both of them.