Movie Gallery
Encyclopedia
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, behind Blockbuster Video. The company rented and sold Blu-ray Disc
Blu-ray Disc
Blu-ray Disc is an optical disc storage medium designed to supersede the DVD format. The plastic disc is 120 mm in diameter and 1.2 mm thick, the same size as DVDs and CDs. Blu-ray Discs contain 25 GB per layer, with dual layer discs being the norm for feature-length video discs...
s, DVD
DVD
A DVD is an optical disc storage media format, invented and developed by Philips, Sony, Toshiba, and Panasonic in 1995. DVDs offer higher storage capacity than Compact Discs while having the same dimensions....
s, VHS
VHS
The Video Home System is a consumer-level analog recording videocassette standard developed by Victor Company of Japan ....
tapes, and video games. Founded in Dothan
Dothan, Alabama
Dothan is a city located in the southeastern corner of the US state of Alabama, situated approximately west of the Georgia state line and north of Florida. It is the seat of Houston County, with portions extending into nearby Dale County and Henry County...
, Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
, the company was headquartered in Dothan, and later in Wilsonville
Wilsonville, Oregon
Wilsonville is a city primarily in Clackamas County, Oregon, United States. A portion of the northern section of the city is in Washington County. Originally founded as Boones Landing due to the Boones Ferry which crossed the Willamette River at the location, the community became Wilsonville in...
, Oregon
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
.
On April 30, 2010, Movie Gallery announced it was closing and liquidating
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
all of its stores per a filing of Chapter 7 bankruptcy. At its peak the firm had about 4,700 stores in North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
, operating mainly under the Movie Gallery, Hollywood Video, and Game Crazy brands. The last of the company's stores were closed in August 2010.
Most regular Movie Gallery locations were located in rural areas, while Hollywood Video locations, which competed directly with Blockbuster Video, were located in urban areas.
Movie Gallery
Movie Gallery was formed in 1985 by Joe Malugen and Harrison Parrish in DothanDothan, Alabama
Dothan is a city located in the southeastern corner of the US state of Alabama, situated approximately west of the Georgia state line and north of Florida. It is the seat of Houston County, with portions extending into nearby Dale County and Henry County...
, Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
. 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
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
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
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
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. This addition of Video Update stores to the Movie Gallery family launched the company's international presence with 100 retail locations in Canada. Following the completion of the Video Update acquisition, Movie Gallery achieved the 2,000 store mark in 2003.
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.
Movie Beam
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. The company was originally founded by Disney and other investors as an alternative to online movie downloads. A special set top box had to be purchased by consumers for the service. Most major movie studios provided New Release content to the service. MovieBeam was shut down on December 15, 2007. As of June 2008 Movie Beam was 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
Wilsonville, Oregon
Wilsonville is a city primarily in Clackamas County, Oregon, United States. A portion of the northern section of the city is in Washington County. Originally founded as Boones Landing due to the Boones Ferry which crossed the Willamette River at the location, the community became Wilsonville in...
, as a DVD
DVD
A DVD is an optical disc storage media format, invented and developed by Philips, Sony, Toshiba, and Panasonic in 1995. DVDs offer higher storage capacity than Compact Discs while having the same dimensions....
and video game rental shop
Rental shop
A rental shop, also known as a video library, is a business that allows a consumer to temporarily obtain a reusable good or product for a specified period of time in exchange for payment, a process known as renting...
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 Blockbuster Video 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 Blockbuster VideoBlockbuster (movie rental store)
Blockbuster LLC is an American-based provider of home video and video game rental services, originally through video rental shops , later adding DVD-by-mail, streaming video on demand, and kiosks. At its peak in 2009, Blockbuster had up to 60,000 employees. There are around 1700 Blockbuster...
. 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 these news. Blockbuster then dropped its purchase plans, citing anti-trust concerns. Movie Gallery completed its purchase of Hollywood Video on April 27, 2005.
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 11Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
bankruptcy protection under the U.S. Bankruptcy Code
Title 11 of the United States Code
Title 11 of the United States Code is the primary source of bankruptcy law in the United States Code.-Contents:Title 11 is subdivided into nine chapters. It used to include more chapters, but some of them have since been repealed in their entirety...
. Because of these troubles, the stock price dropped below $1 per share and were removed from listing on the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
stock exchange in November 2007.
An additional 400 stores were scheduled to close during the bankruptcy reorganization. MovieGallery 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.
Early 2009, Movie Gallery operated about 2,700 Movie Gallery and 1,300 Hollywood Video locations in the United States. Canadian operations include over 200 "Movie Gallery" branded stores, as well as approximately 60 under the VHQ brand in western Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
. In 2009 Movie Gallery closed its Wilsonville, Oregon
Wilsonville, Oregon
Wilsonville is a city primarily in Clackamas County, Oregon, United States. A portion of the northern section of the city is in Washington County. Originally founded as Boones Landing due to the Boones Ferry which crossed the Willamette River at the location, the community became Wilsonville in...
distribution facility, merging it with one in Nashville, Tennessee
Nashville, Tennessee
Nashville is the capital of the U.S. state of Tennessee and the county seat of Davidson County. It is located on the Cumberland River in Davidson County, in the north-central part of the state. The city is a center for the health care, publishing, banking and transportation industries, and is home...
.
Movie Gallery's stock fell from $1.25 at close in October 2009 to $.05 a share at close on December 3, 2009, and many locations fell behind on rent. Movie Gallery hired restructuring firm Moelis & Co. on December 15, 2009, giving it a 30-day grace period to renegotiate with lenders and landlords. But it was forced into bankruptcy a second time.
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 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.
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.
Headquarters
Movie Gallery originally had its headquarters in Dothan, AlabamaDothan, Alabama
Dothan is a city located in the southeastern corner of the US state of Alabama, situated approximately west of the Georgia state line and north of Florida. It is the seat of Houston County, with portions extending into nearby Dale County and Henry County...
. In Dothan the company had 70000 square foot of space in the Porter Square Mall. Later in its life the company's headquarters were in Wilsonville, Oregon
Wilsonville, Oregon
Wilsonville is a city primarily in Clackamas County, Oregon, United States. A portion of the northern section of the city is in Washington County. Originally founded as Boones Landing due to the Boones Ferry which crossed the Willamette River at the location, the community became Wilsonville in...
.
In 2005 Movie Gallery bought Hollywood Video
Hollywood Video
Hollywood Entertainment Corporation , known as Hollywood Video, was a VHS, DVD, and video game rental shop company started in 1988...
, gaining Hollywood's office space in Oregon. Movie Gallery operated its Oregon office out of the space, 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 Tuesday August 17, 2010 at the Wilsonville, Oregon headquarters of Movie Gallery, auctioning away the company's equipment.