August 11, 2022
Ad-supported video streaming distributor Chicken Soup for the Soul Entertainment Aug. 11 announced completion of the acquisition of Redbox Entertainment, creating a content and distribution company targeting value-conscious consumers. The combined companies now offer more than 145 free ad-supported streaming television (FAST) channels, transactional video on demand (TVOD), and a network of more than 36,000 packaged-media kiosks renting Hollywood studio movies nationwide, all supported by original film and television production and distribution divisions.
The company expects revenue to more than triple through this acquisition to approximately $500 million annually.
Through the merger, Galen Smith, former CEO of Redbox, assumes the new role of executive vice chairman of Redbox and Chicken Soup for the Soul Entertainment. Smith will oversee the company’s future growth plans, including strategic acquisitions. 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 his new role, Katz will oversee the company’s operating businesses, including streaming services, Redbox kiosks and original content studios. Smith and Katz will report to William J. Rouhana Jr., chairman and CEO of Chicken Soup for the Soul Entertainment.
“The Redbox brand is a fixture in American entertainment,” Rouhana said in a statement, adding he expects the acquisition will give the companies better scale with a film and television library of more than 51,000 digital titles.
“These collective assets create 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,” Rouhana said.
Chicken Soup for the Soul Entertainment expects that the combined company will exit 2022 with $100 million to $150 million of adjusted pre-tax earnings and expects to deliver annual cost synergies in excess of $40 million in 2023. The combined company also sees numerous opportunities to drive revenue synergies, including expansion of ad inventory through distribution of its larger content library and production pipeline across AVOD and FAST channels, and increased access to the TVOD window for original film productions. Additionally, the Redbox kiosk network and 40-million-member loyalty program offers a new marketing channel to promote the company’s original content productions.
Chicken Soup for the Soul Entertainment had already approved the transaction at the time of signing. Redbox shareholders approved the transaction on Aug. 9. 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.
The combined companies will commence trading on the Nasdaq Global Market on Aug. 12 under the symbol “CSSEL.”
Michael Pachter, media analyst with Wedbush Securities in Los Angeles, said the transaction saves the Redbox brand.
“[Redbox was] almost out of money. This is a good deal for CSSE and allows them to keep Redbox running,” Pachter said in an email.
Chicken Soup for the Soul Entertainment Inc. is a publicly traded operator of video-on-demand streaming services (VOD). The company owns Crackle Plus, which owns and operates a variety of ad-supported VOD streaming services including Crackle, Chicken Soup for the Soul, and Popcornflix. 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. Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name.