Movie Gallery’s sale of MovieBeam questioned
Anonymous letter says $250,000 sale undervalued equipment
By Danny King -- Video Business, 7/2/2008
JULY 2 | Movie Gallery’s sale of its set-top service MovieBeam’s physical assets to a British Virgin Islands-based company in May severely discounted the value of the equipment, which included satellites and computers, according to an anonymous letter filed with the U.S. bankruptcy court in Richmond, Va., yesterday.
The equipment, which was sold to a “mysterious” company for $250,000, may have been worth “way over” $25 million, according to the letter, which suggested that Movie Gallery should have held a public auction for the assets.
Movie Gallery CEO C.J. “Gabe” Gabriel Jr. today declined to comment on the letter.
In May, the retailer received bankruptcy court approval to sell MovieBeam, which it shut down late last year, to investment firm Dar Capital for $2.25 million. The No. 2 movie-rental chain behind Blockbuster bought the service last year from Disney and other investors in a deal the retailer said at the time would cost it less than $10 million; Disney and the other investors had spent more than $100 million on the service.
Movie Gallery emerged from Chapter 11 on May 20 with about 3,300 stores in the U.S. and Canada under Movie Gallery, Hollywood Video and Game Crazy brands.
