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MovieBeam Sale Questioned

1 Jul, 2008 By: Erik Gruenwedel

The U.S. Bankruptcy Court in Richmond, Va., July 1 received a written objection to Movie Gallery Inc.'s May 17 asset sale of its over-the-air MovieBeam streaming service for $250,000.

Dothan, Ala.-based Gallery, which was under bankruptcy protection at the time, in May received approval for the intellectual property rights sale of its MovieBeam download service to third-party Dar Capital for $2.2 million.

Separately, it sold select physical assets related to MovieBeam for $250,000.

The anonymous letter decried the secretive nature of the sale of “satellites, routing computers … and tons of equipment” to a “mysterious” British Virgin Island company.

The letter proposed a public auction of MovieBeam's assets, that Gallery retains majority interest, and that there be an investigation into the buyer, among other demands.

Gallery shuttered MovieBeam last December nine months after acquiring it for $10 million.

Originally founded by The Walt Disney Co. and co-funded by Cisco Systems and Intel Corp. for about $150 million, MovieBeam used over-the air data casting to automatically load proprietary $200 set-top boxes, which allowed users to watch movies on demand with no downloading or hard disc storage required.

The service was available in 31 major cities nationally and featured a regenerating stock of 100 movies (10 new titles per week) loaded for on-demand viewing at any given time. Rentals (for 24 hours) ranged in price from $1.99 to $4.99.

Gallery envisioned MovieBeam as a catalyst to jumpstart a non-existent digital distribution channel that would be marketed at the retail level and include online rentals.

A representative from Gallery, which exited Chapter 11 protection May 20, was not immediately available for comment.

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