Satellite television company Dish Network Corp said it won an auction for video rental chain Blockbuster Inc offering about $320 million, trumping rival offers including that of billionaire investor Carl Icahn.

Dish Network said in a statement early on Wednesday it expects to pay about $228 million in cash to acquire Blockbuster.

Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network, said Tom Cullen, executive vice president of sales, marketing and programing for Dish Network.

The winning bid must still be approved at a hearing in federal bankruptcy court on Thursday.

Blockbuster, which was once the world's largest movie rental chain, filed for bankruptcy in September and put itself up for sale after a reorganization plan fell apart.

A $308.1 million bid from Cobalt Video, a group of hedge funds headed by Monarch Alternative Capital LP, was the highest bid before the auction was moved to an attorney's office not open to the press.

Icahn had bid $310.6 million, but his bid included less money than Monarch's for notes rolled up into a bankruptcy loan and was thus considered a lower bid.

(Reporting by Sakthi Prasad in Bangalore; Editing by Sriraj Kalluvila)