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exclusive: as key movie Rental income is finally starting to come backChicken Soup for Soul Entertainment, the parent company of , Redbox and Crackle, is taking steps to tighten its belt.
As Chicken Soup’s share price hit an all-time low, with its market value down to $55 million, the buzz in the media and entertainment circles grew louder.It closed at $2.60 on Tuesday, half its level in early 2023 and well below levels above $14 at the time The $375 million acquisition of Redbox It closed last August. Of course, the past year has been a tough one for all media companies, with stocks down across the board and most players in cutback mode.
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Multiple sources familiar with management’s thinking told Deadline that layoffs were not within the company’s forecast, which runs many ad-supported streaming businesses with Redbox. However, in lieu of layoffs, executive bonuses normally paid in March have been deferred until the second quarter, and some distribution deals for titles inherited from the Redbox deal have been renegotiated. The company also just received a $50 million capital injection through a stock purchase agreement to bolster its financial resources.
At a recent town hall meeting, Chief Executive Bill Rouhana briefed employees on plans to delay executive bonuses. Another major austerity measure is the renegotiation of individual distribution agreements for select Redbox titles inherited in the acquisition. Redbox has been ramping up its raw production significantly ahead of going public through a merger with special purpose acquisition company Seaport Global in late 2021. Every time a new owner took over — come to think of it, at different budget levels, Warner Bros. found — existing projects were reconsidered within the bounds of their contractual obligations, and sometimes even put on hold.major multiviewer protocols like one Signed by Redbox for 2020 and john wick Producer Basil Iwanyk is not understood to be affected by the withdrawal, the source said.
The company declined to comment on its recent activity, citing a federally mandated quiet period ahead of its fourth-quarter earnings report. CSSE will be one of the last companies to report results this earnings season, but has not specified when. SEC rules require data to be released within 90 days of the end of the previous quarter, meaning the company has until sometime before March 31 to be in the spotlight.
With these moves in place, Redbox’s deal rental revenue is finally starting to flow in again after a long battle with Covid and studios struggling to support their own subscription streaming channels.The company’s revenue rose sharply in February and March as major fourth-quarter theatrical productions such as Black Panther: Wakanda Forever and puss in boots: the last wish Entered the rental window. Specific revenue figures for movies are usually not shared publicly, and most of the momentum will impact the balance sheet in the current quarter rather than the previous one.
The physical and digital rental market is huge and will reach $6.3 billion by 2022, according to Digital Entertainment Group. As with theatrical releases, the size of the overall release program is directly related to revenue. 2023 is expected to grow more than 20% at the box office, fueled by more releases planned, and the year-to-date returns suggest a major comeback story is taking shape.
Redbox, which operates 34,000 kiosks outside of retail like grocery and convenience stores, expects to release at least one major new product a week through the rest of 2023, a big improvement from the Covid downturn. However, there has been a degree of unease since the acquisition, as it consists almost entirely of Chicken Soup’s assumption of Redbox’s debt.While the decision to more than quadruple the company’s debt load rattled many investors, Rouhana himself acknowledged it last fall In an interview with Deadline, with no covenants coming due, debt repayments will not begin until 2024. The Federal Reserve has sharply raised interest rates over the past year, leading to bank failures and a slowdown in mergers and acquisitions across the economy, which does not appear to pose a particular near-term threat to companies.
Still, Chicken Soup revealed last week that it had reached a $50 million stock purchase agreement with Chicago-based investment firm Lincoln Park Capital Fund because of its challenges. The deal, known as a “back” financing arrangement, gives the company more flexibility as it looks to film revenue to fuel growth.
B. Riley analyst Eric Wald has long been bullish on Chicken Soup for the Soul stock, maintaining a 12-month price target of $26 on the stock. He told Deadline that he remains optimistic about the company’s prospects, although he acknowledged that the price target may need to be revisited.
Stocks ‘have been in a state of fear because it’s not like you have amazing news’ about touting rentals with box office surprises cocaine bear, Creed 3 and M3 Gan. While Redbox, like movie theaters, is “still in the wild,” “I believe it will bounce back,” he added. In 2019, before the pandemic, Redbox was generating $200 million in annual EBITDA revenue, Wold said. Its retail price points (rents start at $2 a night) remained attractive to many consumers in a time of inflation, when large swaths of the country didn’t have pay TV or broadband Internet.
With the movie wheels slowly starting to turn again, Chicken Soup hasn’t made many public comments since Rouhana appeared at an investor conference hosted by Needham & Co. on Jan. 11. Needham analyst Laura Martin was there when he was asked what he was most excited about and what he was most worried about circa 2023, citing the return of movies in theaters as the former and the “worrying” rise in interest rates as the latter. By. He repeated his father’s instructions when Martin asked him to convey the best advice he’d ever been given. “Take an extra minute to get things done,” Ruhana said. “He’s said it to me so many times, and now I say it to myself when I’m going to cut corners.”
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