Movie Gallery, Inc. (former

NASDAQ The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...

ticker symbol MOVI) was the second largest movie and

game A game is a structured form of play, usually undertaken for entertainment or fun, and sometimes used as an educational tool. Many games are also considered to be work (such as professional players of spectator sports or games) or art (suc ...

rental company in the United States and Canada, behind

Blockbuster Video Blockbuster or Block Buster may refer to: *Blockbuster (entertainment) a term coined for an extremely successful movie, from which most other uses are derived. Corporations * Blockbuster (retailer), a defunct video and game rental chain ** Bloc ...

. The company rented and sold

Blu-ray Disc The Blu-ray Disc (BD), often known simply as Blu-ray, is a digital optical disc data storage format. It was invented and developed in 2005 and released on June 20, 2006 worldwide. It is designed to supersede the DVD format, and capable of sto ...

s, DVDs, VHS tapes, and

video game Video games, also known as computer games, are electronic games that involves interaction with a user interface or input device such as a joystick, controller, keyboard, or motion sensing device to generate visual feedback. This feedba ...

s. Founded in Dothan,

Alabama (We dare defend our rights) , anthem = " Alabama" , image_map = Alabama in United States.svg , seat = Montgomery , LargestCity = Huntsville , LargestCounty = Baldwin County , LargestMetro = Greater Birmingham , area_total_km2 = 135,7 ...

, the company was headquartered in Dothan, and later in Wilsonville,

Oregon Oregon () is a U.S. state, state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington (state), Washington, while the Snake River delineates much of it ...

. On April 30, 2010, Movie Gallery announced it was closing and liquidating all of its stores per a filing of

Chapter 7 bankruptcy Chapter 7 of Title 11 of the United States Code (Bankruptcy Code) governs the process of liquidation under the bankruptcy laws of the United States, in contrast to Chapters 11 and 13, which govern the process of ''reorganization'' of a debto ...

. At its peak the firm had about 4,700 stores in North America, operating mainly under the Movie Gallery, Hollywood Video, and GameCrazy brands. The last of the company's stores were closed in August 2010. In 2011, three Movie Gallery locations in Northwest Arkansas reopened by an independent business owner who acquired the trademark rights in Arkansas. In 2013, an independent businessman in Jackson,

Mississippi Mississippi () is a state in the Southeastern region of the United States, bordered to the north by Tennessee; to the east by Alabama; to the south by the Gulf of Mexico; to the southwest by Louisiana; and to the northwest by Arkansas. Miss ...

acquired the trademark rights in Mississippi to Movie Gallery and Hollywood Video and announced intentions to reopen select previously profitable stores. Most regular Movie Galleries were located in rural areas, while Hollywood Video locations, which competed directly with Blockbuster, were located in urban areas.

History

Movie Gallery was formed in 1985 by Joe Malugen and Harrison Parrish in Dothan, Alabama. Through its wholly owned subsidiary, M.G.A., the company's founders began operating video specialty stores in southern Alabama and the Florida panhandle, and

franchising Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchisor licenses some or all of its know-how, procedures, intellectual property, use of its busine ...

the Movie Gallery store concept. By June 1987 the company owned five stores and had a franchise operation of 45 stores. In 1988, the company began to consolidate the franchisees into company owned stores. By 1992, the company had a total of 37 stores and annual revenues of $6 million. In August 1994, the company completed an

initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investme ...

of its stock. With the proceeds from this offering, the company began to quickly complete acquisitions of various video chains, primarily in the southeast. In early 1995, the company raised additional public funds and continued the acquisition and development of stores. By the middle of 1996, only 22 months after beginning its aggressive expansion strategy, Movie Gallery had grown to over 850 stores through over 100 separate acquisitions. In 1999, Movie Gallery announced plans to build 100 new stores. The company completed an 88-store acquisition of Blowout Entertainment in May and ended the year with more than 950 locations in 31 states. In 2000, Movie Gallery again set its goal at opening 100 new stores and relocating 25. This goal was surpassed. The company moved forward with its largest single-chain acquisition to date, expanding its base of stores by 30%, in late December 2001. The addition of Video Update stores to the Movie Gallery family launched the company's international presence with 100 retail locations in Canada. Movie Gallery achieved the 1,678 store mark in 2002. In 2005, the company completed the largest acquisition to date with the Hollywood Entertainment merger. This combination of companies increased the store total to 4,700 with revenues in excess of $2.5 billion. In addition, Movie Gallery opened 61 new stores in Western Canada with the acquisition of VHQ Entertainment.

Downfall

The company began having financial difficulties and announced the closure of 520 stores in September 2007. At the time Movie Gallery had about 4,500 locations. The next month, the company filed for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Code. Because of these troubles, the stock price dropped below $1 per share and was removed from listing on the

stock exchange in November 2007. An additional 400 stores were scheduled to close during the bankruptcy reorganization. Movie Gallery emerged from Chapter 11 in May 2008 and appointed C. J. Gabriel, Jr. as the new chief executive officer. Founder and former CEO Joe Malugen continued to serve on the Movie Gallery Board of Directors until leaving on July 30, 2008. The company relocated its headquarters to Wilsonville, Oregon, (home of the Hollywood Video subsidiary) in late 2008. In January 2009, they closed their Wilsonville distribution center. In early 2009, Movie Gallery operated about 2,700 locations and 1,300 Hollywood Video locations in the United States. Canadian operations included over 200 "Movie Gallery" branded stores, as well as approximately 60 under the VHQ brand in western Canada. In 2009 Movie Gallery closed its Wilsonville,

distribution facility, merging it with one in

Nashville Nashville is the capital city of the U.S. state of Tennessee and the seat of Davidson County. With a population of 689,447 at the 2020 U.S. census, Nashville is the most populous city in the state, 21st most-populous city in the U.S., and th ...

Tennessee Tennessee ( , ), officially the State of Tennessee, is a landlocked U.S. state, state in the Southeastern United States, Southeastern region of the United States. Tennessee is the List of U.S. states and territories by area, 36th-largest by ...

. The Chapter 11 reorganization plan failed to solve all of the company's problems; Movie Gallery's stock fell from $1.25 at close in October 2009 to $0.05 a share at close on December 3, 2009, and many locations fell behind on rent. On February 1, 2010, stores received a report stating that about 800 stores were to be shut down. The company hired the law firm of Sonnenschein, Nath & Rosenthal to prepare for a second filing of bankruptcy, and on February 3, 2010, they again filed for Chapter 11 bankruptcy protection. During a company-wide conference call on April 30, 2010, it was announced that all U.S. Hollywood Video, Movie Gallery, and Game Crazy stores would file for Chapter 7 bankruptcy in May 2010. On June 8, 2010, the company's Canadian stores also entered

liquidation Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia, New Zealand, Italy, and many other countries. The assets and property of the company are redistrib ...

. The last US Movie Gallery and Hollywood Video locations closed on July 31, 2010, and the liquidation sale was completed. The remaining Canadian stores closed during the week of August 8. The contents of the company's headquarters were auctioned off in August 2010.

Subsidiaries

MovieBeam

MovieBeam was a set-top service offered in larger cities in which customers could download movies to a set-top box. Most movies expired within 24 hours of downloading. The company was founded by

Disney The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California. Disney was originally founded on October ...

and other investors as an alternative to online movie downloads. A special set-top box had to be purchased by consumers for the service at a retail price of $149.95. Most major movie studios provided new release content to the service. However, MovieBeam failed to gain any serious traction in the marketplace. MovieBeam was shut down on December 15, 2007. As of June 2008 the remnants of MovieBeam, including its trademarks and other intellectual properties, were sold to an outside investors group for approximately $2 million as part of the company's restructuring. All in-store kiosks for the service were then removed as well.

Hollywood Video

Hollywood Video, a subsidiary of Movie Gallery, Inc., operated from Wilsonville,

, as a DVD and

rental shop chain in the United States. It was started in 1988 by former CEO Mark Wattles and his wife. The chain was the largest direct competitor of

until it was purchased by Movie Gallery in 2005. Hollywood Video declared bankruptcy in February 2010 and announced that it would shut down three months later.

Purchase of Hollywood Video

Hollywood Video was the target of a hostile takeover attempt, initially announced at the end of December 2004 by competitor

. In February 2005, Blockbuster announced an exchange offer of $14.50 per share ($11.50 cash and $3.00 in Blockbuster shares). In order to create a stronger position against the hostile takeover, Hollywood Video agreed to a buyout on Monday, January 10, 2005, by its smaller competitor Movie Gallery. Movie Gallery paid $860 million, $13.25 per share, and the assumption of $380 million in debt. Stocks closed at $13.85 on January 10 after the news. Blockbuster then dropped its purchase plans, citing anti-trust concerns. Movie Gallery completed its purchase of Hollywood Video on April 27, 2005.

Headquarters

Movie Gallery originally had its headquarters in Dothan,

.Cook, Jim.
Movie Gallery seeks sequel to early success
" ''The Enterprise Ledger''. June 1, 2008. Retrieved September 26, 2010. In Dothan, the company had of space in the Porter Square Mall.Griffin, Lance.
Movie Gallery says it will keep 'presence' in Dothan
." '' The Dothan Eagle''. December 10, 2008. Retrieved September 26, 2010. Later in its life the company's headquarters were in Wilsonville,

. In 2005 Movie Gallery bought Hollywood Video, gaining Hollywood's office space in Oregon. Movie Gallery operated its Oregon office out of the space,Culverwell, Wendy.
Movie Gallery quietly moves to Wilsonville
" '' Portland Business Journal''. Friday August 14, 2009. Retrieved September 26, 2010. and Hollywood Video, now a subsidiary of Movie Gallery, maintained its headquarters in Wilsonville. In 2007 Movie Gallery filed for Chapter 11 bankruptcy protection. In 2008 when the company emerged from Chapter 11, its new upper management had no ties whatsoever to Dothan, Alabama. Joe Malugen, the founder of Movie Gallery, was no longer the CEO; instead, C. J. Gabriel, an Idaho resident, was named the CEO. Because of this, Jim Cook of ''The Enterprise Ledger'' said "there may be little motivation for keeping the home office" in Dothan. In 2008 the headquarters moved to Wilsonville. The former Porter Square Mall space went up for lease or sale. Movie Gallery kept some central employees in Dothan, and the company said that it would continue to have a "presence" in Dothan. Wendy Culverwell of the '' Portland Business Journal'' said that the headquarters move decision was "unusual" because "most of Hollywood Entertainment's decision-making authority went to Alabama after the sale to Movie Gallery in 2005." After the company filed for Chapter 7, Great American Group, Inc. held an auction on August 17, 2010, at the Wilsonville, Oregon headquarters of Movie Gallery, auctioning away the company's equipment.Culverwell, Wendy.
Movie Gallery liquidation date set
" '' Portland Business Journal''. Friday August 13, 2010. Retrieved September 26, 2010.

References

External links

* {{Video rental shops Video rental services Home video companies of the United States Defunct retail companies of the United States American companies established in 1985 Entertainment companies established in 1985 Entertainment companies disestablished in 2010 Retail companies established in 1985 Retail companies disestablished in 2010 Companies that filed for Chapter 11 bankruptcy in 2007 Companies that filed for Chapter 11 bankruptcy in 2010 Companies that have filed for Chapter 7 bankruptcy Companies based in Dothan, Alabama Companies based in Wilsonville, Oregon