Movie Gallery Signs Definitive Agreement to Purchase Approximately 90 Stores From BlowOut Entertainment, Inc.; Transaction Includes 79 Outlets in Wal-Mart.

DOTHAN, Ala.--(BUSINESS WIRE)--March 22, 1999--Movie Gallery, Inc. (Nasdaq/NM:MOVI) today announced the signing of a definitive purchase agreement for the purchase of substantially all of the assets of approximately 90 stores from BlowOut Entertainment, Inc. (BLWT) for $2.4 million. BlowOut operates video specialty stores within the stores of mass merchant retailers and supermarket chains in 24 states. The outlets Movie Gallery has agreed to purchase produced aggregate revenues for 1998 of approximately $18 million and include 79 outlets located in stores of Wal-Mart Stores, Inc. (NYSE:WMT). BlowOut Entertainment also announced today that it has filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code, along with a motion asking the Bankruptcy Court to approve its selling most of its assets to Movie Gallery. Assuming the Bankruptcy Court approves BlowOut's asset sale to Movie Gallery, Movie Gallery anticipates closing the transaction during the second quarter of 1999. Consummation of the transaction is also subject to customary closing conditions.

Commenting of the announcement, J.T. Malugen, Chairman and Chief Executive Officer of Movie Gallery, said, "We are pleased to announce this transaction, which we believe represents a substantial growth opportunity for Movie Gallery with limited risk. As the only major video specialty store operator that focuses primarily on operating in small-town markets, we have developed a significant expertise in managing stores that are relatively small by industry standards, including the key functional areas of purchasing, marketing, merchandising, staffing, in-store operations and reporting. As a result, we believe we are well positioned to apply this expertise to the purchased outlets, which are smaller than Movie Gallery's typical store profile.

"Furthermore, industry data and continuing experience in our existing stores have demonstrated that increased availability of product has fueled increased interest from consumers. By bringing our copy breadth and depth initiatives to these new stores, we believe we can more fully leverage the outstanding retail traffic the host stores produce. We also expect to benefit from other economies of scale, including those related to spreading corporate overhead costs across a larger business base."

Mr. Malugen added, "This transaction is consistent with the more aggressive 1999 expansion plans that Movie Gallery has previously discussed. Although we will continue to focus heavily on the performance of the Company's existing base of stores in operation, this acquisition does not change our previously disclosed plans to open 100 internally developed stores during 1999. As part of our policy of controlled growth, we will also continue to consider appropriate opportunities to consolidate the video specialty store market."

To take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, you are hereby cautioned that this release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. These risk factors include the Company's ability to profitably operate stores smaller than the Company's typical unit; the ability of the Company to drive incremental customer traffic in these stores; and the risk factors that are discussed from time to time in the Company's SEC reports, including, but not limited to, the report on Form 10-K for the fiscal year ended January 4, 1998.

BlowOut Entertainment, Inc. operates full-service, full-line videocassette and video game rentals and sales departments inside the stores of mass merchant retailers and supermarket chains including Wal-Mart, Kmart, Fred Meyer, Ralphs and Food 4 Less across the country. The company's common stock is traded on the OTC Bulletin Board under the symbol BLWT.

Movie Gallery currently owns and operates 828 video specialty stores and has 105 licensees located in 22 states. The Company is among the three largest video specialty retailers in the United States.