Skip to main content

Chicken Soup for the Soul Agrees To Acquire Redbox

Redbox kiosk
(Image credit: Redbox)

Chicken Soup for the Soul Entertainment said it has agreed to acquire Redbox Entertainment, which has stumbled in making a pivot to streaming from renting DVDs from kiosks in retail outlets.

Chicken Soup for the Soul said the combined companies will have one of the largest independent ad-supported VOD platforms.

“Today marks a transformative moment for Chicken Soup for the Soul Entertainment and an inflection point for the ad-supported streaming industry,” Chicken Soup for the Soul Entertainment chairman and CEO William J. Rouhana Jr. said. “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. 

Also: Making Fast Video Crackle Again With Philippe Guelton, 'Chicken Soup' 

“Redbox has 40 million customers in its loyalty program and high-potential digital television assets, including carriage of over 130 FAST digital channels on its Free Live TV platform, as well as a robust TVOD and PVOD platform,” he added. ”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.”

Redbox reported $140.8 million in losses for 2021 with revenue dropping 47% to $288.5 million. 

The company said revenue from its ad-supported video-on-demand (AVOD) and free, ad-supported television (FAST) businesses wasn’t growing rapidly enough to keep up with the decline of its DVD rental business.

The company laid off 150 staffers in April. 

Redbox went public in October via a special purpose acquisition company (SPAC), but revealed financial troubles in an earlier 8-K filing back in early January.

Redbox shareholders will be getting 0.087 shares of Chicken Soup for the Soul Entertainment class A common stock per Redbox shares. The shares are worth about $50 million. Chicken Soup is also assuming about  $325 million in Redbox stock.

Redbox shareholders, including Apollo Global Management, will own about 23.5% of the combined company.

“We believe that Chicken Soup for the Soul Entertainment is the ideal partner for Redbox,” Redbox CEO Galen Smith said. “By joining forces, we will accelerate Redbox’s transition from a physical to high growth digital media company and be the only entertainment provider truly focused on value for consumers. This all-stock transaction provides Redbox stockholders with the opportunity to participate in the significant near- and long-term upside potential of a diversified and growing company with greater scale and resources. With our footprint of more than 38,000 kiosks, diverse content libraries and combined streaming platforms, we will be well-positioned to deliver consumers a wealth of high-quality entertainment options.”

Chicken Soup for the Soul said it expected the acquisition to be accretive to adjusted earnings before taxes, interest, depreciation and amortization (EBITDA) in 2023 and present opportunities to cross-sell. The company sees $40 million in cost synergies and expects to end the year with a run rate of more than $500 million in revenue and $100 million to $150 million in adjusted EBITDA. ■

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.