SecProbe.io

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						December 21, 2005

Mail Stop 3561

Via US Mail and Facsimile

Ms. Ivy M. Jernigan
Chief Financial Officer
900 West Main Street
Dothan, Alabama 36301

Re:	Movie Gallery, Inc.
	Form 10-K for the year ended January 2, 2005
	Forms 10-QSB for the periods ended October 2, 2005, July 3,
2005
and April 3, 2005
	Commission file #: 000-24548

Dear Ms. Jernigan:

We have reviewed the above referenced filing and have the
following
comments.  Where indicated, we think you should revise your
document
in response to these comments.  If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

Please understand that the purpose of our review process is to
assist
you in your compliance with the applicable disclosure requirements
and
to enhance the overall disclosure in your filing.  We look forward
to
working with you in these respects.  We welcome any questions you
may
have about our comments or any other aspect of our review.  Feel
free
to call us at the telephone numbers listed at the end of this
letter.
* * * * * * * * * * * * * * * * * * * * * * *

Form 10-K for the year ended January 3, 2005

Item 1. Business

1. We note your disclosure on page 9 that you have a customer
loyalty
program, Reel Players, which is based on a point system and
provides
customers the opportunity to earn free rentals and discounts on
movie
purchases.  Please tell us and explain in the notes to your
financial
statements in future filings, how you how you value and account
for
free rentals and discounts awarded to customers under this
program.

Management`s Discussion and Analysis
- Results of Operations, page 32

2. We note from your table of Selected Financial Statement and
Operational Data that you present "equity in losses of
unconsolidated
entities" above the operating income line item.  For consistency
with
your financial statement presentation, please revise future
filings to
present the "equity in losses of unconsolidated entities" below
operating income if you continue to separately present the caption
in
this table.

Consolidated Statements of Cash Flows

3. We note that you have presented purchases of rental inventory-
base
stock as a component of investing activities. Please revise to
also
present cash proceeds from the sale of base stock rental inventory
as
a component of cash flows from investing activities, as including
declines in base stock rental inventories in operating cash flows
results in an overstatement of cash flows from operations.

Notes to the Financial Statements

Note 1. Accounting Policies

- Reclassifications, page F-5

4. We note that the fiscal 2003 balance sheet reflects the
reclassification of certain outstanding checks that were made
between
cash and cash equivalents, prepaid expenses and accounts payable.
Please tell us the nature of these reclassifications including
your
accounting basis for the past and current balance sheet and cash
flow
presentations.

- Leases and Leasehold Improvements, page F-8

5. We note that you recorded a cumulative fourth quarter
adjustment to
correct depreciation expense of $6.3 million, related to a
correction
in your accounting for leases and leasehold improvements, of which
$2.9 million related to years prior to 2004 and was not considered
material to warrant a restatement.  Please show us your analysis
of
the materiality of the 2004 adjustment to the quarterly operating
results for each of the quarterly periods comprising 2004 and
explain
why you do not believe that restatement of the first through third
quarters of 2004 is necessary.  Additionally, tell us the amount
of
the $2.9 million adjustment related to prior years that related to
fiscal years 2003 and 2002.  We may have further comment upon
review
of your response.

Note 8.  Related Party Transactions, page F-18

6. We note from your Schedule 14A Proxy Statement filed May 6,
2005,
that under the Certain Relationships and Related Transactions
section,
you disclose a number of related party transactions which are not
included in the notes to your financial statements in your Form
10-K.
In the notes to your financial statements in future filings,
please
disclose the nature of the relationship of the parties involved, a
description of the transactions, including transactions to which
no
amounts or nominal amounts were ascribed, and the dollar amounts
of
transactions for each of the periods for which income statements
are
presented.  See paragraph 2 of SFAS No. 57.  Your revised
disclosure
should include all transactions between the Company and entities
affiliated with its officers and directors.

Schedule II- Valuation and Qualifying Accounts

7. Please advise us in further detail regarding the nature of the
adjustments to the deferred tax asset valuation allowance during
the
fiscal years ended January 5, 2003 and January 4, 2005 that a
described as "revision of allowance to offset true-up of
preliminary
estimated net operating loss carryforwards to actual". Similarly
explain the nature of the $1,291 adjustment recognized during the
fiscal year ended January 2, 2005 that is described as "reduction
to
true-up preliminary estimated state net operating losses to
actual".
Your response should clearly explain why management does not
believe
these adjustments represent corrections of errors pursuant to
paragraph 36 of APB 20. We may have further comment upon review of
your response.

Form 10-QSB for the quarter ended July 3, 2005

Note 1. Accounting Policies

- Rental Inventory Amortization Estimates

8. We note your disclosure that purchases of DVD catalog are
currently
amortized on an accelerated basis over twenty-four months and VHS
catalog is amortized on an accelerated basis over twenty-four
months
for new store purchases and six months for all other catalog
purchases.  This disclosure appears to be inconsistent from that
in
Note 1 to the financial statements included in your Form 10-K for
the
year ended January 3, 2005 which states that base stock movie
inventory is amortized on an accelerated basis over the first
twelve
months and then on a straight-line basis over the next twelve
months
for DVD and VHS.  Please reconcile these inconsistencies for us
and
revise future filings as appropriate.

- Revenue Recognition

9. We note the disclosure indicating that in order to conform
Hollywood`s accounting method for extended viewing fees to that
used
by Movie Gallery, the Company has reflected the portion of
extended
viewing fees that relate to receivables from customers at the date
of
the merger as a reduction of the receivable balance and extended
viewing fees are no longer being recognized in advance of
collection.
We further note that as a result, in the thirteen and twenty-six
week
periods ended July 3, 2005, this transition in accounting methods
reduced rental revenue by $12.8 million and reduced operating
income
by $11.2 million after adjusting accrued revenue sharing on
accrued
extended viewing fees.

We believe this disclosure is not entirely accurate since
Hollywood`s
results were not included in your results of operations prior to
the
merger, and therefore your rental revenues and operating income
were
not actually reduced by these amounts. A more accurate statement
would
be to indicate that extended viewing fees and operating income for
Hollywood subsequent to the merger were lower than in periods
prior to
the merger as a result of this transition in accounting policy.
Please
confirm that you will clarify your disclosure regarding this
matter in
any future filings.

Note 2. Business Combinations

10. We note from your disclosure in Note 2 that you allocated
$170.9
million of the purchase price of Hollywood Entertainment to the
indefinite lived trade name of Hollywood Video.  Please tell us in
detail how you determined the fair value of this intangible asset.
Also, please tell us why you have determined that the asset does
not
have a 15-year useful life, especially considering that you have
assigned a useful life to the intangible asset related to the Game
Crazy trademark.  Include in your response an analysis that
considers
all of the relevant factors in paragraph 11 of SFAS No. 142 and
any
additional information such as any restrictions or limitations
that
exist regarding the life of the trade name.  Also, tell us the
methods
you plan to utilize for assessing the asset for impairment.

Note 5. Goodwill and Other Intangible Assets

11. We note your disclosure that the changes in the carrying
amounts
of goodwill during the fiscal year ended January 3, 2005 included
approximately $8.4 million in adjustments to acquired goodwill.
Please explain to us and disclose in future filings the nature of
those adjustments to goodwill.

Form 10-QSB for the quarter ended October 3, 2005

Note 2. Business Combinations

12. Please tell us and explain in the notes to your financial
statements in future filings the facts or circumstances that
resulted
in the change in the purchase price allocation for the acquisition
of
Hollywood during the third quarter of 2005.

13. Please tell us and revise the notes to your financial
statements
to disclose the factors that contributed to a purchase price that
resulted in recognition of goodwill in connection with the
Hollywood
and VHQ acquisition transactions. Refer to the requirements of
paragraph 51b of SFAS No.141.

14. We note from your disclosure in Note 2 that on August 29, 2005
Boards Video Company LLC exercised a contractual right to require
Hollywood to purchase all of the 20 Hollywood Video stores and 17
Game
Crazy stores pursuant to a "put" option contained in the license
agreement for these stores.  Please explain for us, and disclose
in
future filings, the date at which you issued the "put" option and
the
nature of the terms of the "put" option, including the amount or
formula for determining the purchase price of the stores.  Also,
please tell us how you accounted for this "put" option liability
at
the time it was issued and the literature that supports your
accounting treatment.  Additionally, please explain how this put
option was valued and accounted for in the Hollywood acquisition
transaction.

Note 3. Property, Furnishings and Equipment

15. We note that a change in estimate was recorded in the quarter
ended October 2, 2005 to conform the lives of Hollywood`s long
lived
assets to Movie Gallery`s policy and to record the increase in
depreciation expense generated by recording Hollywood`s long lived
assets at their increased fair value in the business combination
accounting.  Please explain to us why you did not make the change
to
conform the lives of Hollywood`s long lived assets to Movie
Gallery`s
policy during the second quarter of 2005 when the acquisition took
place.  Also tell us why the increase in depreciation expense
generated by the increased fair value in Hollywood long lived
assets
is considered a change in accounting estimate, as it appears from
Note
2 that the value of the acquired long lived assets did not change
between the second and third quarter.  Also, tell us why you
believe
it is appropriate to charge the portion of the amount that related
to
the ten weeks ended July 3, 2005 in the thirteen weeks ended
October
2, 2005, rather than restating the second quarter Form 10-Q.  We
may
have further comment upon receipt of your response.

Note 6. Long Term Debt

16. We note your disclosure in Note 6 that you have entered into a
two-year floating-to-fixed interest rate swap for an amount of
$280
million.  Please tell us, and disclose in future filings, how you
have
accounted for the swap in accordance with the guidance in SFAS No.
133.

Note 9. Commitments and Contingencies

17. We note that at October 2, 2005, the legal contingencies
reserve
was $8.9 million of which $8.5 million relates to pre-acquisition
contingencies.  Please tell us if this amount has been included in
the
purchase price allocation of Hollywood Entertainment or your other
recent acquisitions.  Also, please tell us and disclose in future
filings the nature of the legal or other contingencies outstanding
and
the reasons the amounts may require future adjustment.  See SAB
Topic
2A.7 and paragraphs 9-12 of SFAS 5.

Note 11.  Subsequent Events

18. We note your disclosure that on October 25, 2005 you notified
92
Movie Gallery associates that their positions will be relocated or
eliminated as part of integration efforts and that the cost will
be
expensed in future periods over the retention service period for
the
impacted associates.  Please tell us the length of the retention
service period for the associates and if it is less than 60 days,
please tell us your basis for not recording the liability at the
time
the plan was communicated to the employees.  See paragraphs 9
through
11 of SFAS No. 146.

Report on Form 8-K/A dated April 27, 2005
Unaudited Pro Forma Consolidated Balance Sheet

19. The presentation in your pro forma balance sheet is somewhat
confusing as you have presented various pro forma adjustments
included
in the balance sheet on a net rather than gross basis. In future
filings, please ensure that all adjustments in your pro forma
balance
sheet are presented on a gross rather than net or combined basis.

* * * * * * * * * * * * * * * * * * * * * * *

As appropriate, please respond via EDGAR to these comments within
10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your responses to our
comments
and provides any requested supplemental information.  Please
understand that we may have additional comments after reviewing
your
responses to our comments.

We urge all persons who are responsible for the accuracy and
adequacy
of the disclosure in the filings reviewed by the staff to be
certain
that they have provided all information investors require for an
informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have
made.

In connection with responding to our comments, please provide, in
writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal
securities laws of the United States.

In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Corporation Finance in our review of your filing or in response to
our
comments on your filing.

You may contact Claire Erlanger at 202-551-3301 or me at 202-551-
3813
if you have questions.

								Sincerely,

								Linda Cvrkel
								Branch Chief
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Ms. Ivy M. Jernigan
Movie Gallery, Inc.
December 21, 2005
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