Movie Gallery Muses Blockbuster

DOTHAN, AL-On the heels of acquiring Hollywood Entertainment’s Hollywood Video stores, Movie Gallery’s management might pursue a purchase of their biggest competitor, Blockbuster Inc., one executive said during the retailer’s quarterly earnings conference call.

“Everybody has speculated,” says Thomas Johnson, senior vice president of corporate finance and business development. “It certainly makes a lot of sense if you were to put the two companies together. I think we would be very receptive to do something of that magnitude, and we’re going to do whatever makes the most sense to create the most value for our shareholders.”

Movie Gallery closed on its $1.2 billion acquisition of Hollywood early last year, adding 2,000 stores to its portfolio, which now operates 4,800 stores in total. Blockbuster, by contrast, has about 9,000 stores worldwide. Both companies are facing challenges as consumers switch their home entertainment preferences from store-based rentals toward Internet-subscription companies like Netflix and online downloads.