MOVIE GALLERY/HOLLYWOOD VIDEO TO SHUT DOWN

Video rental chain Movie Gallery Inc., which has been struggling under a burdensome debt load piled on when it acquired Hollywood Video for $1.1 billion in 2005, has reached the point of exhaustion and has decided to shut down all of its stores, the Wall Street Journal reported today (Monday). The newspaper said that employees at the stores were informed of the company’s decision on Friday. Previously the company had said that it planned to close about half of the stores and rely on the remaining core group of profitable outlets to restore it to financial health. But presumably executives with the company determined that earnings from those outlets would not be enough to service its debt. Moreover, the company has had to compete with online renter Netflix, kiosk operator Redbox, and longtime brick-and-mortar rival Blockbuster. (Blockbuster is the largest video store chain; Movie Gallery is No. 2.) Home Video magazine said today (Monday) that the company plans to continue operating as usual for the next two weeks, followed by a two-day closing sale and then liquidation.