Company will liquidate, close 760 stores

COEUR d'ALENE - It's time to roll the credits - or it's game over - for a Hollywood Video store on Kathleen Avenue.

Movie Gallery Inc., which operates stores under the Movie Gallery, Hollywood Video and Game Crazy brands, announced earlier this week that it filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Eastern District of Virginia.

With the bankruptcy announcement, the company said in a news release it will liquidate and close about 760 stores in the U.S., and it's likely to close more before the Chapter 11 process ends. On the list of stores closing is the one at 560 W. Kathleen Ave., along U.S. 95 and next to the Fred Meyer store.

Movie Gallery, based in Wilsonville, Ore., said it will continue operating during the process, and the filing is due to the "economic and competitive realities facing its business."

The company has been straining as it competes with movies-by-mail services Netflix Inc., and kiosk operators such as Coinstar Inc.'s Redbox, and Internet delivery of movies and TV programs. The company could not be reached for comment. A store employee declined to say how many people work at the store.

Others in the movie rental business agreed that Netflix and Redbox are at least partially to blame, but believe the weak economy had the most effect.

Steve Turk, who owns two Video Theater stores with his wife, Jannice, one in Coeur d'Alene and one in Post Falls, said people in general these days have less discretionary income.

"Instead of five movies rented in a week, they now might rent three," Turk said. "Business is just tough these days."

He has operated the two video rental stores since 1983, at 1910 N. Government Way, in Coeur d'Alene, and 109 E. Seltice Way.

"We don't plan on going anywhere," Turk said. "The majority of video rental is still done by brick-and-mortar stores."

Meanwhile, the Hollywood Video store at 1675 E. Seltice Way, in Post Falls, and the Movie Gallery outlet at 6613 W. Commercial Park Ave., in Rathdrum, are to remain open, the company said. A Movie Gallery store in Sandpoint, at 610 N. Fifth, also is to stay open.

Movie Gallery said it will be using the reorganization to address its capital structure and adjust its business operations.

In the last two years, Movie Gallery took steps to overcome its challenges, including closing several hundred underperforming stores nationwide, but that wasn't enough, the company said.

After these latest store closings, the company will operate more than 1,100 Movie Gallery, 545 Hollywood Video, and 250 Game Crazy stores. It's the second time in three years Movie Gallery filed for bankruptcy.