Redbox, the struggling DVD-rental kiosk operator and video streamer, is now part of Chicken Soup for the Soul Entertainment — the streaming aggregator that gets its name from the best-selling series of self-help books.
Chicken Soup for the Soul Entertainment announced Thursday that it has completed the acquisition of Redbox Entertainment in an all-stock transaction valued at about $370 million, after announcing the purchase agreement in May.
The deal ends Redbox’s brief reprisal as a publicly traded entity. In October 2021 Redbox went public after merging with a special purpose acquisition company (SPAC). But the company hit a steep drop-off in business and reported mounting losses, leading Redbox to lay off 150 employees, about 10% of its workforce, earlier this year. Before going public last year, Redbox’s parent company, Outerwall, was taken private by Apollo Global Management in 2016.
Redbox brings to CSSE a network about 36,000 kiosks in the U.S., with a customer loyalty program that has more than 40 million members, as well as ad-supported and transactional VOD services. Together, CSSE and Redbox now have more than 145 free ad-supported streaming TV (FAST) channels.
Chicken Soup for the Soul Entertainment — whose parent company owns the rights to the book series of the same name — operates AVOD streaming services including Crackle (which it acquired from Sony Pictures Television), Popcornflix and Chicken Soup for the Soul. The company also acquires and distributes video content through its Screen Media and 1091 Pictures subsidiaries and produces original video content through the Chicken Soup for the Soul Television Group.
The company expects revenue to more than triple via the Redbox acquisition to approximately $500 million annually.
“I’ve been looking forward to the day Redbox would become part of the Chicken Soup for the Soul Entertainment family — and today is that day,” Bill Rouhana Jr., chairman and CEO of Chicken Soup for the Soul Entertainment, said in a statement.
Chicken Soup for the Soul Entertainment expects that the combined company will exit 2022 with a run rate exceeding $500 million of revenue and $100 million-$150 million of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). CSSE said it expects to deliver annual run rate cost synergies of more than $40 million in 2023.
As previously announced, Chicken Soup for the Soul Entertainment 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.
With the close of the Redbox deal, CSSE appointed Galen Smith, former CEO of Redbox, to the new role of executive vice chairman of Redbox and Chicken Soup for the Soul Entertainment. Smith will oversee the company’s growth plans, including strategic acquisitions. In addition, Jonathan Katz has been named president of Chicken Soup for the Soul Entertainment. Katz previously held senior executive roles at Scripps Networks, Katz Networks and Turner Broadcasting. In the new role, he will oversee the company’s operating businesses, including streaming services, Redbox kiosks and original content studios. Smith and Katz report to Rouhana.