Movie Gallery to mark Hollywood chain’s history

20th anniversary will be celebrated in Portland

By Danny King -- Video Business, 9/26/2008

SEPT. 26 | Movie Gallery will celebrate the 20th anniversary of its Hollywood Video unit next month as the company looks to build business at the western U.S. subsidiary chain five months after the parent company exited bankruptcy.

Hollywood Video’s flagship Southeast Powell Boulevard store in Portland, Ore., will have raffles, giveaways of free movie rentals for a year, a sidewalk sale and other promotions during the weekend of Oct. 3, Movie Gallery president and chief operating officer Sherif Mityas said. October promotions will extend to all of Hollywood Video’s 20 Portland-area stores and, to a lesser extent, the rest of Movie Gallery’s 3,300 stores, during the rest of the month, Mityas said.

“All of the stores will have special giveaways to commemorate the event, but this will be the centerpiece,” said Mityas. “It’s very important to recognize milestones in the organization’s history, and Hollywood has a great brand name.”

The promotion is an attempt to build business at and recognition for a chain whose acquisition helped lead Movie Gallery into bankruptcy last year and whose 1,400 stores are viewed as vital to the company’s resurgence.

Under Movie Gallery, about 600 Hollywood Video stores have been closed, although Mityas said the company is no longer shutting stores.

In addition to the anniversary promotion, Movie Gallery’s plans to boost Hollywood’s business include “our partnership with our studio partners to embrace and support Blu-ray conversion in the marketplace,” Mityas said. He declined to be more specific.

Founded in 1988 by Mark Wattles, who has more recently gained attention as owner of Ultimate Electronics and an activist shareholder of Circuit City, Hollywood Video expanded into videogames with its Game Crazy unit in 1999 before being acquired by Movie Gallery three years ago. That $1.2 billion acquisition weighed down Movie Gallery with debt, and the company filed Chapter 11 last October.

Since emerging from bankruptcy in May, the company has changed much of its management, including C.J. “Gabe” Gabriel replacing Joe Malugen as CEO that month, Mityas joining the company in June and Lucinda “Cindy” Baier replacing Thomas Johnson Jr. as Movie Gallery’s chief financial officer in July. In August, Malugen, who co-founded Movie Gallery in 1985, resigned from the company’s board of directors.

Before the bankruptcy filing, Hollywood Video stores averaged about $140,000 in revenue, compared with the Movie Gallery brand’s $80,000, according to Movie Gallery, but Hollywood posted a steep operating loss.

“While we have different competitive pressures in the Hollywood and Movie Gallery markets, I’m very encouraged that all brands are generating some improvements,” said Mityas. “Folks are looking toward more affordable entertainment. That helps lift all boats.”