Hollywood Entertainment Forms Online Subsidiary

Hollywood Entertainment Corp., dba Hollywood Video, the nation’s second
largest video store chain, established Internet Hollywood Inc., a new
subsidiary that will be responsible for operating and expanding the company’s
online businesses, including Reel.com.

The company also named Jeffrey D. Jordan as president of Internet Hollywood
and David G. Martin as Jordan’s replacement as executive vice president and
chief financial officer of Hollywood Entertainment Corp.

Internet Hollywood will own and operate Hollywood Entertainment’s existing
Internet business, which currently includes online movie store, Reel.com, and will seek to develop and/or acquire complementary
Internet entertainment businesses. The company said it is currently evaluating
additional financing alternatives to support the growth of Internet Hollywood.

“As a leading entertainment company with over 27 million member households, we
believe we have significant long-term opportunities to deliver entertainment
and entertainment-related information over the Internet,” said Mark J. Wattles, chairman and CEO of Hollywood Entertainment.

“Our acquisition of
Reel.com was our first step toward securing our leading position in this
space. The creation of Internet Hollywood, Inc. reflects our continued focus
on the Internet as well as our desire to accelerate the growth of this area of
our business.”

Jordan has worked closely with Reel.com since its acquisition in October of
1998. Prior to joining Hollywood Entertainment, he held a variety of positions
at the Walt Disney Co., including vice president of strategic planning and
senior vice president and chief financial officer of The Disney Store
Worldwide.

Martin comes from NationsBanc Montgomery Securities LLC, most recently as
managing director of high yield finance. He has also worked at Nomura
Securities Co. Ltd. and Salomon Brothers Inc.

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