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Chicken Soup for the Soul Entertainment to acquire Redbox in $375M deal

Chicken Soup for the Soul Entertainment, owner of Crackle AVOD service, is scooping up DVD rental business Redbox in a $375 million deal


The all stock deal is comprised of $50 million in Chicken Soup for the Soul stock and the assumption of $321 million in Redbox’s debt, according to Forbes. It will leave Chicken Soup shareholders with 76.5% of the company and Redbox shareholders 23.5%, the company said in a presentation, while majority owner Apollo Global Management will hold approximately 15%.

Majority shareholders of both companies have approved the transaction, which is expected to close in the second half of 2022.

With the transaction, Chicken Soup for the Soul wants to create a leading independent AVOD provider, as it looks to grow Redbox’s reach while shifting the legacy kiosk-focused movie rental business to a more digital focused direct-to-consumer media platform for value conscious consumers.


Chicken Soup sees assets coming together in a complementary pairing for ad-supported integrated streaming services and leveraging a large, combined content library.

Headquartered in Chicago, RedBox has more than 38,000 kiosks nationwide including grocery stores and retail locations, with 90% of Americans within 5 minutes of a kiosk which offer DVD and Blu-Ray rentals for about $2 per night. It counts nearly 40 million Redbox Perks loyalty program members and throughout 2021 had been focused on expanding its digital business, including an AVOD and free ad-supported streaming TV (FAST) service called Free Live TV. It also has a streaming app available on several platforms.

However, as much of Redbox’s business relates to the number and quality of theatrical films that are released, the company said it was hurt in 2021 by the Covid-19 pandemic as fewer films came to theaters. Redbox didn’t recover to the extent expected last year, and after borrowing the remainder of a credit facility in January 2022, was exploring strategic alternatives, according to a 10-K filing. In March Redbox let go 150 employees to reduce its operating costs.

This came after RedBox completed a merger with special purpose acquisition company (SPAC) Seaport Global Acquisition Corp., in October and began trading under the ticker symbol RDBX. Shares in the company fell from around $14 at the end of October to around $2 in April.

In January executives described how the newly public company planned to grow digital revenues but still monetize legacy kiosks, which were expected to last for seven to 10 more years.


Chicken Soup said Redbox’s legacy DVD business is expected grow in the next 12-24 months as first-run films return to theaters (movies at Redbox are typically available 80 to 120 days before they hit Netflix, the company noted) but expects digital transformation to drive long-term revenue growth. It plans to make investments in platform technology, content and ad sales force to help drive that shift.

Chicken Soup, meanwhile, owns AVOD streaming service Crackle, along with Chicken Soup for the Soul and Popcornflix, counting 40 million monthly active users. Its own film and TV AVOD library boasts 14,500 movies and 24,000 episodes of TV with distribution across platforms like Roku, Amazon FireTV, Samsung, fuboTV, Vizio’s SmartCast smart TV app, and Xfinity Flex.

“Today marks a transformative moment for Chicken Soup for the Soul Entertainment and an inflection point for the ad-supported streaming industry,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment, in a statement. “Our acquisition of Redbox will accelerate the scaling of our business as it combines complementary teams and services to create the streaming industry’s premier independent AVOD.”

In a 2021 annual report RedBox said over 70% of its customers identify as “deal hunters” and later adopters of technology, providing an opportunity to tailor digital products to their needs as they shift to new platforms over time.

In addition to loyalty program members, Rouhana called out Redbox’s “high-potential digital television assets” such as 130 FAST channels on its Free Live TV platform, along with a robust TVOD (transactional video on-demand) and PVOD platform.

“Together, we will build a fully developed AVOD and FAST streaming business: proven branded streaming services, formidable content and production capabilities, and a strong AVOD and FAST ad sales operation,” Rouhana continued.

The aim is to bring greater scale and resources to Redbox, speeding up a transition from a physical distribution to digital media company, with an eye on value customers. The companies pointed to the changing consumer landscape, citing a recent IAB study that showed ad spending on connected TV platforms grew 57% from 2020 to 2021, and projections for additional 39% growth this year.

Executives also noted the macro environment and more viewers turning to less expensive ad-supported options in a highly penetrated subscription video on-demand market.

“More and more viewers are embracing ad-supported streaming offerings in a content environment characterized by cord-cutting and saturation of high-priced subscription services. Near term, these conditions are even more acute against a macro backdrop of rising inflation and economic uncertainty,” Rouhana said. “With the combination of a large content library, digital AVOD and FAST channel capabilities, and an expanding global audience, we believe that we will be able to deliver more exciting premium entertainment for millions of value conscious viewers and drive further growth and value creation for our stockholders.”

Chicken Soup expects the combined company will exit 2022 with a run-rate exceeding $500 million of revenue and $100-150 million of Adjusted EBITDA. It expects to realize $41 million in net synergies by the end of 2023.  In a presentation for investors, it highlighted opportunities to cross sell products, the dual utilize content libraries and rationalize costs.

For revenue synergies it sees potential to cross sell and market across the combined company’s customer bases; increased revenue opportunity from incremental Screen Media Ventures titles in Redbox kiosks; and the chance for greater TVOD transactions along with increased AVOD engagement and watch time from a combined base.

From a cost perspective, Chicken Soup expects significant cost savings from combined content libraries and new content acquisition; license and product savings from using the Chicken Soup for the Soul catalog at Redbox kiosks; and general and administrative savings in marketing, kiosk optimization, a combined technology platform and public company costs

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