Redbox Entertainment capped the latest chapter of a wild financial ride Thursday, with closure of its purchase by Chicken Soup for the Soul Entertainment.
Galen Smith, formerly CEO of the previously distressed Redbox, will now serve as executive vice chairman of Redbox and Chicken Soup for the Soul Entertainment, with his team kept intact. Smith will oversee the company’s future growth plans, including strategic acquisitions.
Also, former Scripps executive Jonathan Katz was named president of Chicken Soup for the Soul Entertainment. Katz will oversee the company’s operating businesses, including streaming services, Redbox kiosks and original content studios.
Both executives will report to William Rouhana, chairman and CEO of Chicken Soup.
“The Redbox brand is a fixture in American entertainment and now joins our powerful portfolio of streaming brands, including Crackle, Popcornflix, and Chicken Soup for the Soul,” Rouhana said.
Redbox IPO'd last October via special purpose acquisition company. It had plans to transition the marketing heft of its 36,000 DVD/Blu-ray rental kiosks -- which have more than 40 million members -- into a thriving streaming business based around FAST, AVOD and TVOD.
But trouble emerged with disruption of the theatrical pipeline due to COVID -- the revenue generated by the nascent streaming operations couldn't offset the declines in consumers visiting kiosk for what was a dwindling supply of fresh theatrical films at the time. Redbox losses doubled to nearly $141 million in 2021.
For its part, Chicken Soup believes that with an improving content pipeline, and the growth of a three-pronged streaming business, things will soon turn around for Redbox -- it's projecting annual revenue to soon triple to around $500 million.
According to Rouhana, Redbox's kiosks and AVOD, FAST and TVOD platforms, combined with a library that features 51,000 titles, "creates a fully formed streaming business for a new era of digital entertainment that we anticipate will accelerate the growth and profitability of our company well ahead of our original plans."
Under terms of the deal, existing Redbox shareholders will receive a fixed exchange ratio of 0.087 of a share of class A common stock of Chicken Soup for the Soul Entertainment per Redbox share. Chicken Soup stockholders will own approximately 76.5% of the combined company, and Redbox stockholders will own approximately 23.5% of the combined company, on a fully diluted basis.
