Global cuts 150 jobs and 40 video stores

Global, once the UK's second-largest movie-hire chain, said it had been hammered mainly by piracy, but also by the cut-price selling of videos and DVDs by supermarket giants including Tesco, and the ever-expanding video-on-demand services offered by cable and satellite broadcasters.

It has now turned exclusively to renting and selling DVDs, and yesterday announced the launch of Global DVD Ltd, which will preserve a 520-strong workforce at 70 shops across the UK.

In 2005, Global reported that its full-year turnover had fallen from 34.8m to 29.9m and the chain crashed from a profit of 1.54m to a loss of 426,000 at the operating level.

Just five years ago, Global - which is focused on Scotland, the north of England, and south Wales - saw profits reach 3.2m, and "Maq" Rasul announced plans for a 300-strong network and suggested expansion plans that triggered flotation rumours. In 2003, he had reportedly paid himself 1.4m, as profits from his empire more than doubled.

Yesterday Tenon, the receiver, said every effort had been made to save the chain of video stores, after "struggling to cope with a downturn in the video rental market and the difficulties caused by video piracy in particular".

A spokesman added: "With the sector struggling as a whole, attempts to sell the business over this period proved unsuccessful. Turnaround and restructuring efforts, including a rolling closure programme of the poorer performing shops, improved the company's operating performance. Unfortunately, the residual debt, largely comprising lease termination and dilapidation costs, crystallised as a result of the 40 shop closures, rendered the company insolvent and left the directors with no alternative but to place the Global into administration."

Global DVD will continue to trade from Global Video's offices in Glasgow. Rasul, who is in his fifties, arrived in Glasgow 40 years ago, and after gaining a university degree opened his first video shop in the city in 1985. It expanded rapidly, helped initially by growing demand for Bollywood films by Asian communities here and in the south.

The spokesman said yesterday that Rasul - recently named as Scotland's fourth and the UK's 60th richest Asian businessman by the Sunday Times, with an estimated fortune of 25m - was out of the country.

According to the most recent industry statistics, the number of DVD rentals by UK consumers rose 35 per cent last year to nearly 120 million, valuing the market at 363m, and further growth is expected. Nearly ten million UK adults rent DVDs regularly. Twenty-four per cent rent four or more times a month, and 39-per cent once a month.

Global Video had recently responded well to the changing marketplace by placing greater emphasis on computer games, which can be bought on its website alongside DVD and VHS movies.

Fiona Moriarty, director of the Scottish Retail Consortium, said she regretted any loss of a well-known name from the high street, but was not surprised by the demise of Global Video.

"Videos aren't a treat item anymore. Their sales and the their rentals have been replaced by DVDs, which are far more affordable than they were."