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HOLLYWOOD ENTERTAINMENT ANNOUNCES PURCHASE AND SALE AGREEMENT TO PURCHASE THE VIDEO CENTRAL SUPERSTORE CHAIN

 PORTLAND, Ore., Sept. 20 /PRNewswire/ -- Hollywood Entertainment Corp. (NASDAQ: HLYW) an 18-store chain of video superstores operating under the name of Hollywood Video, announced today that it has entered into an agreement to acquire Video Central, a 33-store chain of video superstores, for a cash purchase price of $30.5 million.
 Citibank provided financial advisory services to Hollywood Entertainment and has been retained to arrange the necessary financing to complete the acquisition. Hollywood Entertainment will finance the acquisition with a combination of debt and a portion of the proceeds from Hollywood Entertainment's recently completed public offering.
 Video Central, a division of H.E. Butt Grocery Co. (H.E.B.), is the fifth largest video retailer in the country and a leading video retailer in Central and South Texas, which includes the metropolitan areas of San Antonio, Houston, Corpus Christi and Austin, Texas, as well as the Rio Grande Valley region. Video Central opened its first video superstore in 1987.
 For the fiscal year ended Nov. 2, 1992, Video Central generated revenues of $31.6 million and pre-tax free cash flow of $5.3 million. For the 11 periods ending Sept. 5, 1993, revenues were $30.4 million and pre-tax free cash flow was $5.3 million, compared to the prior year's 11 periods revenue of $26.8 million and pre-tax free cash flow of $4.7 million.
 Video Central stores average approximately 7,200 square feet in size, with some stores as large as 10,000 square feet, and carry a comprehensive selection of approximately 14,000 prerecorded videocassettes for rental.
 Video Central maintains strong to dominant market share positions in all of its operating areas with the exception of Houston, where it has only a limited presence. The company possesses a leading 34 percent share of the San Antonio market, the 10th largest city in the United States. Video Central has also been recognized by the video industry as an outstanding operator, being named "Retailer of the Year" in 1992 at the Video Software Dealers Association (VSDA) national convention.
 The combination of Hollywood Video and Video Central will create the third-largest video specialty chain in terms of total video rental revenue.
 Craig Odanovich, the general manager of Video Central, who has agreed to become the chief operating officer Hollywood Entertainment upon completion of the acquisition, commented, "I view the acquisition of Video Central by Hollywood Entertainment to be an exciting vehicle for growth that will provide tremendous opportunity for the more than 800 Video Central employees. I feel both companies are highly compatible and look forward to the synergy resulting from the combination of the two management teams." Odanovich currently serves as a director for the Video Software Dealers Association.
 Mark J. Wattles, the chairman and chief executive officer of Hollywood Entertainment, commented that "The Video Central division of H.E.B. is self sufficient and will only require additional corporate accounting and computer support, which are two areas where Hollywood Entertainment is very strong. Video Central operates some of the most profitable superstores in the country. Its store presentation, pricing and rental terms are almost identical to Hollywood Video, making this a simple transition." He added that "we are very excited about the Video Central management team and the additional experience they will bring to the combined companies. They will be very beneficial in carrying out our growth plans."
 Hollywood Entertainment Corp. previously reported pro forma net income of $416,132 or 10 cents per share for the second quarter versus net income of $219,932 or 5 cents per share the same period a year ago for an increase of 94 percent. Pro forma net income in the first six months of 1993 increased 134 percent to $857,375 from $365,665 in the prior year period. Same store sales for the second quarter increased 19 percent from the comparable prior year period.
 Hollywood Entertainment owns and operates 18 video retail superstores in the Pacific Northwest under the name "Hollywood Video." On July 16, 1993, the company completed an initial public offering of 1,725,000 shares at $7 per share.
 -0- 9/20/93
 /CONTACT: Mark Wattles, chief executive officer of Hollywood Entertainment Corp., 503-624-1615/


CO: Hollywood Entertainment Corp.; Video Central ST: Oregon IN: ENT SU: TNM

PK-BR -- SF005 -- 3610 09/20/93 11:10 EDT
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Date:Sep 20, 1993
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