Redbox Owner Seeks SEC Hearing to Avoid NASDAQ Delisting

Redbox owner Chicken Soup for the Soul Entertainment is seeking a hearing with the Securities Exchange Commission to get an extended 180-day period (until Aug. 6) to regain compliance with the trading board’s $1-per-share minimum stock valuation.

Failure to maintain the minimum stock valuation can result in delisting from NASDAQ, making it difficult to solicit stock-based funding.

CSSE last September received notice from the SEC that its stock price had failed to meet the minimum value threshold for at least 10 business days. The company was given 180 days to become compliant, but as of March 20, 2024, the stock was still below the threshold.

CSSE shares closed April 1 at slightly more than 15 cents per share, giving the company a market valuation of $4.91 million. If the company can elevate its market valuation to $5 million for 10 consecutive business days, it would regain compliance. CSSE’s stock was trading at $15 per share following the merger between Redbox and CSSE in August 2022.

The company reported net revenue of $36 million in the most-recent fiscal quarter, ended Sept. 30, 2023, up more than 14% from revenue of $31.6 million in the previous-year period.

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Lionsgate Files SEC Paperwork for Separation of Motion Picture/Television Production, Starz Businesses

Lionsgate July 12 announced the filing of paperwork with the Securities and Exchange Commission (SEC) in connection with its planned separation of its studio (motion picture/television production) business and Starz media company into two independent, publicly traded companies.

The split would result in Lionsgate’s studio segments and a substantial portion of its corporate general and administrative functions becoming an independent public company. The company’s media networks segment (Starz) would remain in the existing company.

“The filing of this Form 10 continues the process of planning for the separation of the studio and Starz businesses,” CEO Jon Feltheimer said in a statement.

The filing includes preliminary detailed information about the studio business, the Starz business and the pending separate companies.

“The prospect of separating Lionsgate and Starz into standalone companies … will allow each company to pursue its own distinct strategy, while offering investors the opportunity to own both a pure-play publicly-traded content studio and a premium subscription platform,” Feltheimer said.

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Lionsgate announced the timing of the future separation would remain subject to a number of factors, including ongoing and potential business opportunities as well as the condition of the financial markets. The separation itself remains contingent on final approval by Lionsgate’s board of directors as well as approval by shareholders and governmental authorities, including the Supreme Court of British Columbia, and other customary conditions.

Redbox Lays Off 150 Employees, Delays Fiscal-2021 Report Release

Redbox Entertainment April 1 disclosed it laid off 150 employees, or 10% of its workforce, due to the ongoing impact of the pandemic. The venerable home entertainment brand also informed the Securities and Exchange Commission that it would delay filing its 2021 annual fiscal report for the period ended Dec. 31, 2021.

Redbox said the staff cuts, which occurred March 29, would help decrease annual operating costs by approximately $13.1 million, and that it would incur a one-time restructuring charge of about $3.8 million, with the bulk due to related to severance costs.

As previously disclosed, Redbox, which became a publicly traded company last October, said its 2021 business encountered higher marketing and content expenditures without increased offsetting revenue.

Jan. 28 the company borrowed the remaining availability under its revolving credit facility, and management has been actively taking steps to decrease monthly costs, delay capital expenditures and increase revenue.

Redbox is also exploring a number of potential strategic alternatives with respect to its corporate or capital structure and seeking financing to fund operations and one-time restructuring costs. The company’s board has established a strategic review committee to, among other things, consider and oversee strategic alternatives or transactions that may be available with respect to its corporate or capital structure.

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Redbox, in the filing, said the strategic review process, and ongoing financing negotiations, have involved significant resources and have been a priority for management, diverting significant management time and internal resources away from reviewing and completing its financial statements.

GameStop Under SEC Scrutiny With Stock Up 1,500% in 2021

GameStop June 10 disclosed it is being investigated by federal regulators from the Securities Exchange Commission — the result of months-long stock volatility that has seen the video game retailer’s shares skyrocket 1,500% in value in 2021.

The retailer said it is reviewing the regulatory request, producing the requested documents and intends to cooperate fully with the SEC.

“This inquiry is not expected to adversely impact us,” GameStop said in a statement.

After raising almost $552 million from the issuance of 3.5 million shares in April, GameStop said it plans to issue another 5 million shares in the near future. The stock, along with AMC Entertainment’s, has become fodder for individual traders fueled by social media and crowdsourced stock moves. Company shares closed June 9 up over $300 a share from little more than $4 per share last July.

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“The trading probe is definitely a big red flag,” David Trainer, CEO of research firm New Constructs, said in a media interview. Trainer characterized the SEC probe as “the needle that can bust the balloon of the stock’s valuation.”

Wedbush Securities media analyst Michael Pachter contends the regulatory investigation is normal in light of the stock jump. But the analyst believes the June 10 morning decline in share price has more to do with the new stock sale.

“We think that the sell-off had little to do with the fundamentals and everything to do with the company’s failure to reveal its strategy,” Pachter wrote in a June 10 note.

Regardless, Texas-based GameStop saw first-quarter sales (ended May 1) increase 25% to $1.27 billion, from revenue of $1 billion in the previous-year period. Net loss narrowed nearly 60% to $66.8 million, from a net loss of $165.7 million a year earlier.

Speaking on his last call as CEO, George Sherman said the increased revenue came despite the closure of 118 under-performing stores. GameStop still operates nearly 4,700 stores worldwide.

Former Amazon executive Matt Furlong becomes GameStop’s new CEO on June 21.

Furlong’s arrival, along with fellow Amazon executive Mike Recupero as new CFO, underlines the fact that GameStop’s the future is online and with ecommerce. The chain is adding 700,000-square feet to a fulfillment facility in York, Pennsylvania.

“This new distribution center, which is expected to be operational by the fourth quarter of this year, will enhance our order fulfillment capabilities on the East Coast,” Sherman said on the June 9 call.

 

Hulu Adding Access to ESPN+, Exclusive 20th Century Movies, 5th Season of ‘The Handmaid’s Tale,’ SEC College Football; Hulu With Live TV Tops 4 Million Subs

SVOD pioneer Hulu will offer its 38.8 million subscriber access to the ESPN+ sports streaming service in 2021. Hulu’s online TV platform, Hulu With Live TV, now tops 4 million subscribers, making it the top online TV platform and fifth-largest pay-TV operator in the U.S.

“Users can sign up or enjoy existing ESPN+ subscriptions without ever having to leave the Hulu app,” Hulu president Kelly Campbell said on Disney’s Investor Day Dec. 10. Campbell said the SVOD platform in 2021 would bow original movies from 20th Century Studios and Searchlight. The platform also greenlighted a fifth season of original hit series “The Handmaid’s Tale.”

ESPN+, which had 11.5 million subscribers as of Dec. 2, will begin streaming select Southeastern Conference college football games in 2021. ABC TV (and ESPN+) will become the exclusive SEC broadcasters in 2024 for 10 years, including the SEC Championship. The SEC, which is currently broadcast on CBS and ESPN, includes perennial national champion contender University of Alabama, in addition to the University of Georgia, University of Florida and Louisiana State University, among other schools.

“This is a significant day for the Southeastern Conference and for the future of our member institutions. Our agreement with ESPN will greatly enhance our ability to support our student-athletes in the years ahead and to further enrich the game day experience for SEC fans around the world,” Greg Sankey, SEC Commissioner, said in a statement. “One of our primary goals was to improve the television scheduling process in ways that will benefit our students, coaches, alumni and fans. By working in collaboration with ESPN, we were able to secure an agreement that includes more lead time for many game time announcements, and in many ways modernizes the college football scheduling process.”

Netflix Breaks Out Subs by Region, Sees Higher Revenue Growth Outside U.S.

Netflix Dec. 16 for the first time broke out revenue and subscriber numbers for three international regions in a filing with the Securities and Exchange Commission.

The numbers show higher revenue growth rates outside the United States and Canada over the past three years.

In those two countries, according to an 8K filing, Netflix said its subscription streaming revenue was up nearly 21% for the first nine months of 2019 compared to the comparable period last year, rising to nearly $7.4 billion from $6.12 billion.

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During that same period, SVOD revenue in the Europe, Middle East and Africa region grew 39%, to $3.98 billion from $2.87 billion. Revenue was up 57% in Asia-Pacific, to $1.05 billion in the first nine months of 2019 from $668 million in the first nine months of 2018, and 27% in Latin America, to $2.05 billion from $1.67 billion.

Comparing SVOD revenue for the first nine months of 2019 with the comparable period two years ago, the United States saw gains of 51%, compared to revenue hikes of 79% in Latin America, 144% in Europe, the Middle East and Africa, and 163% in Asia Pacific.

At the end of September 2019, Netflix had 67.11 million paid subscribers in the United States and Canada; 47.36 million in Europe, the Middle East and Africa; 29.38 million in Latin America; and 14.49 million in Asia.

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The company says that beginning in the fourth quarter, it will report financials for the same four regions. Netflix previously reported financials in just two categories, the United States and Canada and globally.

 

Helios and Matheson Files With SEC for MoviePass Spinoff

Helios and Matheson Analytics announced Jan. 17 that it has filed confidentially with the Securities and Exchange Commission to spin off its theatrical ticket subscription service MoviePass as a new subsidiary, MoviePass Entertainment Holdings.

Helios will spin off shares by listing on Nasdaq or an alternative exchange and distribute some of the shares as a dividend to shareholders as of a record date yet to be selected, according the announcement.

The company will retain a controlling stake in MoviePass.