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Video rental chain acquires MovieBeam

Movie Gallery, a large video rental chain in the United States, has purchased MovieBeam, the on-demand movie service that uses broadcast spectrum for wireless delivery. Though terms of the transaction were not disclosed, Bloomberg News reported the sale was for less than $10 million.

The MovieBeam delivery network, available in 31 major metropolitan areas across the United States, uses over-the-air datacasting technology through PBS television stations to provide movies-on-demand from most major Hollywood studios.

Walt Disney, which started MovieBeam in three markets in 2003, sold an undisclosed percentage of the company last year for $52.6 million in a private placement of preferred stock. Other investors included Cisco Systems, Intel and venture capital firms.

Using National Datacast, a for-profit subsidiary of PBS, MovieBeam's signal rides on top of the existing PBS broadcasting infrastructure. National Datacast provides MovieBeam with network coordination, management and monitoring.

Customers of MovieBeam purchase a set-top box for $100. Capable of standard and high-definition movie display, the internal hard drive comes loaded with 100 films, which are gradually updated through the over-the-signals. Movie rentals range in cost from $1.99 to $4.99.

Movie Gallery said it would use MovieBeam's existing infrastructure to develop alternative digital delivery platforms, including downloading or streaming of movies over the Internet, Internet protocol-based content delivery and other developing channels.