Hollywood Commences Tender Offer and Consent Solicitation For 9.625% Senior Subordinated Notes Due 2011 PORTLAND, Ore., March 24 /PRNewswire-FirstCall/ -- Hollywood Entertainment Corporation ("Hollywood") (Nadsaq: HLYW) announced today that, in connection with the previously announced acquisition (the "Proposed Transaction") of Hollywood by Movie Gallery, Inc. ("Movie Gallery") (Nadsaq: MOVI), it has commenced a cash tender offer and consent solicitation for any and all of its $225,000,000 outstanding principal amount of 9.625% Senior Subordinated Notes due 2011 (CUSIP No. 436141AJ4) (the "Notes"). The tender offer and the consent solicitation are being made upon the terms and subject to the conditions set forth in the Offer to Purchase for Cash and Consent Solicitation Statement and related Letter of Transmittal and Consent, each dated March 24, 2005. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on April 21, 2005, unless extended or earlier terminated. The total consideration for each $1,000 principal amount of Notes validly tendered and accepted for purchase will be determined on April 7, 2005 (unless the expiration date for the tender offer is extended by ten or more business days, in which case the price will be determined on the tenth business day prior to the expiration date as extended) using the present value on the expected payment date of the sum of $1,048.13 plus interest that would be paid from the payment date through March 15, 2007. The present value will be determined using the yield to maturity of the 3.375% U.S. Treasury Note due Feb. 28, 2007, plus a fixed spread of 62.5 basis points. The total consideration for each Note tendered includes a consent payment of $30.00 per $1,000 principal amount of Notes to holders who validly tender their Notes and deliver their consents prior to 5:00 p.m., New York City time, on April 7, 2005 (the "Consent Payment Deadline"), unless such date is extended. Holders who properly tender also will be paid accrued and unpaid interest up to, but not including, the payment date. Holders who tender their Notes after the Consent Payment Deadline will not receive the consent payment. Tendered Notes may not be withdrawn and consents may not be revoked after the Withdrawal Deadline, which will be the earlier of (i) the Consent Payment Deadline and (ii) 5:00 p.m., New York City time, on the business day following the business day on which Hollywood issues a press release announcing that it has obtained the consents from holders of at least a majority in aggregate principal amount of the Notes, unless such date is extended. The consents are being solicited to eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture governing the Notes (the "Proposed Amendments"). Holders may not tender their Notes without delivering consents or deliver consents without tendering their Notes. The obligation of Hollywood to accept for purchase and pay for the Notes in the tender offer is conditioned on, among other things, the satisfaction or waiver of all conditions precedent to the consummation of the Proposed Transaction and the receipt of consents to the Proposed Amendments from the holders of at least a majority of the aggregate principal amount of outstanding Notes, each as described in more detail in the Offer to Purchase and Consent Solicitation Statement. This announcement is neither an offer to purchase, nor a solicitation of an offer to purchase, nor a solicitation of tenders or consents with respect to, any Notes. The tender offer and the consent solicitation are being made solely pursuant to the Offer to Purchase for Cash and Consent Solicitation Statement and related Letter of Transmittal and Consent. Hollywood has retained Wachovia Securities to serve as the dealer manager and solicitation agent for the tender offer and the consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to Wachovia Securities at (704) 715-8341 or (866) 309-6316. Requests for documents in connection with the tender offer and the consent solicitation may be directed to MacKenzie Partners, Inc., the information agent, at (212) 929-5500 or (800) 322-2885. Hollywood, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from its stockholders with respect to the transactions contemplated by the Agreement and Plan of Merger by and among Movie Gallery, TG Holdings, Inc., a wholly-owned subsidiary of Movie Gallery, and Hollywood dated as of January 9, 2005 (the "Merger Agreement"). Information about the directors and executive officers of Hollywood and their interests in the transactions contemplated by the Merger Agreement, including their ownership of Hollywood common stock, is set forth in the proxy statement for Hollywood's special meeting to consider the Merger Agreement, which was filed with the SEC on March 21, 2005. Investors and security holders may obtain additional information regarding the interests of such potential participants by reading the proxy statement and the other relevant documents filed with the SEC as they become available. DATASOURCE: Hollywood Entertainment Corporation CONTACT: Wachovia Securities, +1-704-715-8341 or +1-866-309-6316; or MacKenzie Partners, Inc., +1-212-929-5500 or +1-800-322-2885

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