S&P drops Movie Gallery

Standard & Poor's said it lowered its corporate credit and bank loan ratings on Movie Gallery Inc. to B- from B and the unsecured note rating to CCC from CCC+. The outlook is negative.

The downgrade reflects S&P's growing concern that the company's operating results will continue to be pressured by weak industry fundamentals.

The agency said the ratings on Movie Gallery reflect the risks of operating in a mature and declining video rental industry, the company's dependence on decisions made by movie studios, and increased operating risk due to its acquisition of Hollywood Entertainment Corp.

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