The $375 million all-stock deal is premised on growth in the free ad-supported streaming market.
Redbox CEO Galen Smith (COURTESY OF GETTY IMAGES)
DVD-focused entertainment firm Redbox is set to get new ownership.
The company, best known for its red kiosks which rent out DVDs of films and TV series, has agreed to be acquired by Chicken Soup for the Soul Entertainment, which owns the Crackle streaming service, among other properties (including, yes, the Chicken Soup for the Soul book series).
The $375 million all-stock merger includes the assumption of Redbox’s $325 million debt and $50 million in Chicken Soup for the Soul stock.
While there is no indication that the DVD kiosks will be disappearing in the near future (in fact, the companies touted future growth in DVDs thanks to a slate of big-budget blockbuster movies this year), in a statement announcing the deal, Chicken Soup for the Soul indicated the deal was really about further expanding its footprint in free ad-supported streaming video.
“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,” said William J. Rouhana Jr., chairman and CEO of Chicken Soup for the Soul Entertainment, in a statement. “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. 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 has been struggling in recent months. While the company’s share price spiked in recent weeks amid retail trader interest after it secured new financing, it remained on shaky ground financially, and cut about 10 percent of its workforce last month.
Chicken Soup for the Soul, meanwhile, has reoriented itself around streaming through Crackle (which it acquired from Sony in 2019) and PopcornFlix. Now it is betting that Redbox’s nascent streaming offering, combined with its loyalty program and, yes, the DVD kiosks, can propel it forward in a streaming market saturated with increasingly expensive paid offerings, “even in a recession,” Rouhana said on a conference call about the deal.
“The migration is so ferocious into AVOD that we’ll still be sold out,” he added. “We’re in the right place at the right time.”
The Hollywood Reporter's Alex Weprin contributed to this post.