Movie Gallery slips back into red

Settles MovieBeam patent infringement suit

By Cindy Spielvogel -- Video Business, 3/18/2008

MARCH 18 | Movie Gallery reported a net loss of $469,000 for the month ended Feb. 10, according to a mandatory filing in the U.S. Bankruptcy Court in Richmond. The company also reported it settled a patent infringement case regarding the now-defunct MovieBeam set-top system.

The loss for the Jan. 7-Feb. 10 period compares with $12.7 million in net income for the previous month, which included the generally lucrative holiday period in the fourth quarter.

The loss reflects a $4.1 million gain from Hollywood Video stores offset by a $4.6 million loss at Movie Gallery-branded stores.

Total revenue for the month amounted to $199.9 million, $131.3 million from Hollywood stores and $68.6 million from Movie Gallery stores.

For the entire four-month period since filing its Chapter 11 bankruptcy on Oct. 16, Movie Gallery reported a net loss of $90.3 million on $748.7 million in revenue.

Hollywood stores, many of which have closed since the bankruptcy was filed, accounted for $98.6 million in losses on $520.8 million in revenue for the four-month period.

Movie Gallery-branded stores reported net income of $8.3 million on $227.9 million in revenue for four months.

The company also reported it settled a patent suit with Dotcast, a digital broadcast technology company, which had filed a suit against Movie Gallery over patents involving Moviebeam.

Movie Gallery said Dotcast has dropped its claims against the company, and Movie Gallery has agreed to reject its licensing agreement regarding MovieBeam, which it no longer operates.

Dotcast agreed to cover the costs of having Movie Gallery return some software and equipment related to the service, according to terms of the settlement.