Movie-rental firm CEO quits

PORTLAND, Ore. -- As a bidding war raged yesterday for Hollywood Entertainment Corp., the number two movie-rental chain, founder and chief executive Mark Wattles abruptly resigned.

He had agreed last summer to take the company private with the help of Los Angeles buyout firm Leonard Green & Partners. But the board responded to shareholder pressure to take other bids.

Wattles did not comment on his departure.

His resignation left Hollywood the target of a takeover fight between Dallas-based Blockbuster, the largest movie rental chain, and number three Movie Gallery, of Dothan, Ala.

On Wednesday, Blockbuster said it would pay nearly $1 billion for Hollywood, which has already agreed to a $900 million cash buyout offer from Movie Gallery.

All three chains face growing competition from online movie-order services, including Netflix Inc., as well as from retailers like Wal-Mart Stores Inc.

Wattles founded Hollywood in 1987 in Portland and modeled his first store on Blockbuster stores. He beat Blockbuster to prime locations in many cities.

Movie Gallery has focused on rural markets.