SAN FRANCISCO (AP) -- Movie Gallery Inc., owner of the Hollywood Video movie rental chain, may file for bankruptcy court protection as soon as next week, according to a news report.

The company, which has filed for bankruptcy once before, is fighting to stay afloat as consumers increasingly watch movies online instead of going to stores to pick them out to rent.

The chain could seek Chapter 11 protection as early as Tuesday, but the filing could take longer if negotiations continue, the Wall Street Journal reported online Wednesday evening.

A call to Movie Gallery was not immediately returned.

Neither was a call to Sopris Capital Advisors LLC, which became a lead owner of the company in 2008, when it last emerged from court protection.

As part of its bankruptcy restructuring plan, the Wilsonville, Ore., company could close about two-thirds of its stores, the Journal reported. According to Movie Gallery's Web site, it has more than 3,000 stores.

Those closures could lead to significant job losses at the company, which employs about 21,000 people.

The newspaper said it was quoting people familiar with the matter but did not name them.

Movie Gallery's negotiations center on a plan that would exchange debt for equity in a reorganized company, the Journal reported. The company's debt grew in 2005 when it bought Hollywood Entertainment Corp.

The plan might wipe out existing shares, as often happens in corporate bankruptcies. Prearranged bankruptcy plans, like the one that may be proposed, usually require agreement in principle from lenders before the case is filed. Such arrangements are preferred by companies because they can cut the amount of time and money and time spent in court.

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