Just days after the announcement that it would buy a majority interest in Sony Pictures Television’s Crackle online video unit sent its stock into the stratosphere, Chicken Soup for the Soul Entertainment shares began to retreat, losing about 17% of their value in early trading Monday.
CSSE shares surged about 36% on March 29 -- rising $3.32 per share from $9.06 each to $12.36 each -- after it announced the Sony deal. After the deal is closed, CSS Entertainment and Sony will launch a new streaming video joint venture -- Crackle Plus.
Variety first reported the Crackle deal.
The stock started to retreat a bit on April 1, giving back about half of that gain in early trading, falling as much as 17% ($2.14 per share) to $10.22 each. The stock was trading at $10.56 per share at 12:06 p.m. on April 1, down $1.80 each or 14.6%.
In addition to contributing the Crackle brand, Sony will also kick in its monthly active users and its ad rep business to the joint venture. SPT and Crackle Plus will also enter into a license agreement for the rights to popular TV series and movies from the Sony Pictures Entertainment library.
In addition, New Media Services, a wholly-owned subsidiary of Sony Electronics Inc., will provide the technology back-end services for the newly formed joint venture.
Sony will retain ownership of Crackle’s original content library, but will make it available for licensing to the joint venture.
“Crackle is a valuable asset and we feel confident it will thrive and grow in this new environment with CSS Entertainment,” Sony Pictures Television chairman Mike Hopkins said in a press release announcing the deal. “We were drawn to CSS Entertainment as our partner in this venture because of its aggressive, entrepreneurial approach. The CSS Entertainment team have the enthusiasm and strong business acumen to ensure Crackle Plus is poised to maximize the growing opportunities in the AVOD marketplace.”
Chicken Soup for the Soul Entertainment, the company behind the popular inspirational book series of the same name, plans to contribute six owned and operated AVOD networks (Popcornflix, Truli, Popcornflix Kids, Popcornflix Comedy, Frightpix, and Espanolflix) and subscription video-on-demand platform Pivotshare to the joint venture.
“This transaction positions CSS Entertainment as a leader in the high-growth AVOD business,” said CSS Entertainment chairman and CEO William J. Rouhana Jr., in a press release. “Creating a new platform that brings together CSS Entertainment’s VOD assets with SPT’s Crackle brand and AVOD assets, establishes a compelling offering for viewers and advertisers. Consistent with our business plan, we plan to build Crackle Plus aggressively and profitably through organic growth and, potentially, acquisitions.”
Crackle Plus is expected to have a combined audience of about 10 million monthly active users on its owned and operated networks, as well as millions of additional users from its ad rep business, making it one of the largest AVOD platforms in the U.S.
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