* Shares in Netflix, Coinstar and Blockbuster rise
* Movie Gallery to close remaining U.S. stores-report
LOS ANGELES May 3 Shares in Netflix Inc
(NFLX.O), Blockbuster Inc BBI.N and Redbox owner Coinstar Inc
(CSTR.O) climbed on Monday after a Wall Street Journal report
that Movie Gallery will close all its U.S. stores.
The liquidation of Movie Gallery Inc MVGRQ.PK, which also
operates the Hollywood Video chain, means the marquee will be
taken down for a company that once thrived by serving rural
customers. Its exit from the industry may leave 300 million
annual rentals up for grabs, analysts estimated.
Movie Gallery and long-time competitor Blockbuster have
suffered from the flight of customers to mail-service Netflix
and the $1 per-day rentals from Redbox's bright red kiosks.
The Wall Street Journal, citing unnamed sources, was first
to report that Movie Gallery planned to close its remaining
Before this latest development, the company had already
started on plans to close more than half of its 2,415 stores,
and over the next couple months the rest will close, the
newspaper's website said.
Movie Gallery could not be reached for comment.
Michael Pachter, an analyst with Wedbush Morgan Securities,
said that with Movie Gallery liquidating, about 300 million
annual movie rental transactions are up for grabs.
"The old Hollywood Video stores overlap very nicely with
Blockbuster, so Blockbuster should compete for probably 75
million of those," Pachter said.
He added that video-on-demand and pay-per-view providers
also will gain some of Movie Gallery's old customers, as will
the rental industry's two high-flyers, Redbox and Netflix.
"It sure opens up the opportunity to put a Redbox in front
of every closed Movie Gallery," Pachter said.
Movie Gallery filed for bankruptcy for the second time in
three years in February, after sales fell and losses mounted.
At the time, the company had roughly 19,100 employees.
"What did the typewriter manufacturer do wrong when IBM put
them out of business with the PC?" Pachter said.
Shares in Coinstar, which rose Friday following
surprisingly strong quarterly results for its Redbox unit,
climbed 7.4 percent on Monday to $47.64
Blockbuster, a brick-and-mortar movie rental chain that
itself has said it could file for bankruptcy, also saw shares
increase 7.4 percent to close at 40 cents.
And Netflix shares ended up 3.1 percent to $101.99.
(Reporting by Alex Dobuzinskis: Editing by Carol Bishopric)