Movie Gallery Poised for Video-On-Demand

DOTHAN, AL-Movie Gallery Inc. implemented a slew of new initiatives, which resulted in a narrowing of its losses for the full-year and final quarter of 2006. They are the result of a strategic planning and balance-sheet restructuring program begun in April with a real estate assessment and accelerated in August with the help of Merrill Lynch & Co., and turnaround specialists Alvarez & Marsal.

The move came as the locally based second-largest movie rental chain was suffering losses from competition with rival Blockbuster and Netflix, the online movie rental company. In addition, the company was grappling with absorption of its 2005 acquisition of Hollywood Entertainment Corp., which left it with nearly $1.3 billion in debt.

During 2006, Movie Gallery closed 230 under-performing and overlapping stores and opened just 123 new units, which Joseph Malugen, chairman, president and CEO, said during a conference call, “were already in the pipeline. We don’t expect many openings this year,” he added.