June 17, 2021
Redbox in May announced its intent to go public through the formation of a “special purpose acquisition company,” a relatively new phenomenon that allows a private company to go public without going through the traditional initial public offering approach. The transaction will result in Redbox becoming a publicly traded company with an enterprise value of $693 million. Upon closing, Redbox’s common stock is expected to trade on Nasdaq under the ticker symbol RDBX.
Media Play News reached out to Redbox CEO Galen Smith for a Q&A, part of an ongoing series of conversations with home industry leaders past, present — and future.
MPN: First of all, Galen, why go public in the first place? Redbox has been owned by Apollo Global Management for five years — why leave now?
Smith: We’re at an important inflection point in our digital transformation — over the past several years, Redbox has transformed from a single-product physical offering into a multi-window, multi-product experience for entertainment lovers, combining physical and digital channels to provide customers more choice. Redbox has always aimed to serve the value-conscious customer well and by raising additional capital through this transaction, we’ll be even better positioned to do that by enhancing our offerings and customer experience. We plan to invest in additional ad-supported content, deploy an SVOD and premium channels platform, and expand original movies through Redbox Entertainment titles.
Apollo has been a great partner and this transaction doesn’t change that — along with other current equity holders, they are rolling 100% of their interests into the new company, so we’ll continue to have their support. With the shift to digital intensifying, we see exciting opportunities ahead for Redbox and believe the best way to accelerate the growth of our digital business is to attract additional investors. We’re pleased we found a great partner in Seaport Global Acquisition Corp (NASDAQ: SGAM), who shares our confidence in the path forward and wants to make that a reality.
MPN: Why are you going the SPAC rather than IPO route? Is it because Wall Street is all about growth, and investors might not see the opportunity in Redbox that you do? What are the advantages?
Smith: We chose to go the route of merging with a SPAC as we thought it was a more efficient way to raise capital and become a public company. Redbox is one of the most recognized entertainment brands in the U.S., and we view this transaction, which will help us accelerate growth, as a natural next step in our evolution.
We’re eager to expand our investment in Redbox Entertainment to acquire and distribute original films, and this transaction will help us do that. We’ve already released 16 original movies and plan to expand that to 36 titles annually in theaters and widely on demand including through Redbox. We also expect significant growth in our digital business as we invest the capital we raise in licensed content, marketing and product expansion and offerings.
MPN: As a public company, won’t user data be made public every 90 days? What does this mean for Redbox?
Smith: As a public company, we will report on our business performance every quarter as we did when we were previously part of Outerwall. We look forward to demonstrating our progress in executing our digital transformation.
MPN: As a standalone company, will you have more flexibility than you did under Apollo?
Smith: Apollo has been a great partner, and in this next chapter as a public company, we intend to accelerate and build on the transformational work we began as a private company. As part of Apollo, we launched and grew TVOD and AVOD platforms through significant investments in technology. Additionally, we launched an upgraded mobile app and website, and introduced our new loyalty program, Redbox Perks, which now has 39 million members. We also launched Redbox Entertainment to produce, acquire and distribute original content for our customers.
MPN: Will there be more synergies as a public company?
Smith: One of the most exciting parts of becoming a public company is gaining access to new capital and resources, which will provide additional flexibility to make strategic acquisitions that could further accelerate our opportunities to serve customers and our transformation.
MPN: Redbox remains the cheapest way to rent a new-release movie. How do you go about relaying that message to consumers fixated on streaming?
Smith: Our vision is to provide quality home entertainment to everyone, and to make it ridiculously cheap and easy for consumers to get the entertainment they want most. While we’ve seen and led a lot of changes in the entertainment landscape over the past two decades as the industry has evolved, our commitment to three core tenets — value, convenience, and simplicity — have remained constant at every step. These tenets will continue to guide us as we expand into digital, and we’re fortunate to have a loyal customer base that trusts Redbox to provide a differentiated, affordable entertainment experience.
Importantly, Redbox is an “and” business — our customers are renting DVDs and streaming movies digitally. As we’ve bolstered our On Demand platform we’ve seen sustained interest from customers who continue to rent DVDs at our kiosks, which provide the best value for new-release movies. And, we’re proud that our expansion into digital has allowed us to better serve customers through more choice.