Video Chain, MGM to Share DVD Revenue

Hollywood Entertainment Corp., the second-largest U.S. video-store chain, will share revenue from DVD rentals with MGM Inc. to maintain supplies of popular movies. The agreement expands on a VHS revenue-sharing contract with MGM, Portland, Ore.-based Hollywood Entertainment said.

Revenue sharing gives a portion of VHS rental income to studios in exchange for discounts on purchases by video stores, allowing the video chains to buy more copies of popular movies.

Blockbuster Inc., the largest U.S. video-rental chain, said last month it might end some revenue-sharing agreements because it doesn’t want to share income from DVD rentals, which have profit margins 10 percentage points higher than those on VHS tapes.