Acquisition creates an entertainment company
for value-conscious consumers across AVOD, FAST, and TVOD with over
40 million customer loyalty members
Revenue is expected to more than triple over
the next year; increased scale and over $40 million in operating
synergies support an accelerated path to positive free cash flow
Adds over 11,000 additional movies and
television shows to the company’s already robust 40,000-title
streaming catalog, as well as Free Live TV platform with over 145
free ad-supported streaming television (FAST) channels and
transactional video on demand (TVOD) platforms available on dozens
of devices
Redbox’s 36,000 kiosks will expand the
company’s touchpoints for advertisers beyond free streaming
channels and provide new marketing capability to promote original
movies
Galen C. Smith appointed to the new role of
executive vice chairman of Redbox and Chicken Soup for the Soul
Entertainment, and entertainment industry veteran Jonathan Katz
named president of Chicken Soup for the Soul Entertainment
Chicken Soup for the Soul Entertainment (NASDAQ: CSSE) today
announced the company has completed the acquisition of Redbox
Entertainment Inc. (NASDAQ: RDBX) – creating an entertainment
content and distribution offering targeting value-conscious
consumers. The combined companies now offer ad-supported video on
demand (AVOD), over 145 free ad-supported streaming television
(FAST) channels, transactional video on demand (TVOD), and a
network of over 36,000 kiosks 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.
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Galen C. Smith was appointed to the new
role of executive vice chairman of Redbox and Chicken Soup for the
Soul Entertainment. Credit: Chicken Soup for the Soul
Entertainment
Today, the company also announced the appointment of two key
media executives with deep knowledge of the entertainment and
streaming space to drive its continued growth. Galen C. Smith,
former chief executive officer of Redbox, has been appointed to 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. Also announced
today, 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 chief executive officer of Chicken Soup for the Soul
Entertainment.
“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. The Redbox brand is a fixture in American
entertainment and now joins our powerful portfolio of streaming
brands, including Crackle, Popcornflix, and Chicken Soup for the
Soul,” said William J. Rouhana, Jr., chairman and chief executive
officer of Chicken Soup for the Soul Entertainment. “This
acquisition gives us immediate scale, growing our film and
television library to over 51,000 assets, establishing a broad
complement of AVOD, TVOD, and FAST channel services, reaching
millions of viewers across dozens of platforms, and adding Redbox’s
36,000 kiosks nationwide, with a customer loyalty program that has
over 40 million members. 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. The team at Redbox is
incredible and will join an equally talented team across our
Chicken Soup for the Soul Entertainment companies. I’m excited to
welcome our new colleagues and look forward to sharing more about
our plans for the future.”
Financially Compelling
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 - $150 million of Adjusted EBITDA and
expects to deliver annual run rate cost synergies in excess of $40
million in 2023. The combined company also sees numerous
opportunities to drive revenue synergies from its complementary
assets, 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
loyalty program offer a new marketing channel to promote the
company’s original content productions.
Transaction Details
Chicken Soup for the Soul Entertainment had already approved the
transaction at the time of signing. Redbox shareholders approved
the transaction on August 9. Existing Redbox shareholders will
receive a fixed exchange ratio of 0.087 of a share of class A
common stock of Chicken Soup for the Soul Entertainment per Redbox
share. 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.
As part of the transaction, Chicken Soup for the Soul
Entertainment has assumed the obligations under Redbox’s
outstanding private and public warrants including those that traded
on the Nasdaq Global Market under the symbol “RDBXW.” The warrants
replacing the former Redbox warrants will be issued on a one for
one basis and entitle the holder to receive upon exercise shares of
CSSE Class A Common Stock equal to the product of (A) the number of
shares of Redbox Class A Common Stock that were subject to the
holder’s Redbox warrants and (B) 0.087 (the “Exchange Ratio”), with
a corresponding change to the exercise price of such warrant based
on the Exchange Ratio. No fractional share will be issued upon
warrant exercise. Accordingly, a holder will be required to
surrender the equivalent of warrants to acquire 11.494 shares of
Redbox Class A Common Stock in order to purchase one share of CSSE
Class A Common Stock upon exercise of the warrants. The per-share
exercise price for the warrants will be $132.18 per share. This is
calculated by dividing the current $11.50 per-share exercise price
of the former Redbox warrants by the Exchange Ratio. It is
anticipated that the new public warrants will commence trading on
the Nasdaq Global Market on or about Friday, August 12, 2022 under
the symbol “CSSEL.”
Advisors
Guggenheim Securities, LLC served as financial advisor to
Chicken Soup for the Soul Entertainment. Graubard Miller served as
legal counsel to Chicken Soup for the Soul Entertainment. PJT
Partners and Kroll, LLC served as financial advisors to Redbox.
Weil, Gotshal & Manges LLP served as legal counsel to
Redbox.
Conference Call
The management of Chicken Soup for the Soul Entertainment will
host an investor conference call today at 4:30 pm ET to discuss the
transaction as well as Chicken Soup for the Soul Entertainment’s
results for its second quarter ended June 30, 2022. To access a
dial-in number, the company encourages participants to register in
advance by visiting the following pre-registration link here.
A webcast of the call will also be available at the events
section of the Chicken Soup for the Soul Entertainment investor
relations website: https://ir.cssentertainment.com/.
About Chicken Soup for the Soul Entertainment
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE)
operates 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.
About Redbox
Redbox Entertainment Inc. (pre-transaction symbol on NASDAQ:
RDBX) is a leading entertainment company that gives consumers
access to a large variety of content across digital and physical
media. The company operates a rapidly growing digital streaming
service that provides both ad-supported (AVOD) and paid movies from
Hollywood studios and hundreds of content partners, as well as over
145 channels of free ad-supported streaming television (FAST). The
Redbox app is available on major entertainment platforms that
include Roku devices, connected TVs, gaming platforms, the web as
well iOS and Android devices. Redbox also operates its popular
kiosks across the US at thousands of retail locations – giving
consumers affordable access to the latest in entertainment. The
company produces, acquires, and distributes movies through its
Redbox Entertainment™ label, providing rights to talent-led films
that are distributed across Redbox’s digital and physical services
as well as through third-party digital services. Headquartered just
outside of Chicago, Redbox has offices in Los Angeles and Seattle.
For more information, visit www.redbox.com.
Forward-Looking Statements
This communication relates to the business combination
transaction between Chicken Soup for the Soul Entertainment, Inc.
(“CSSE”) and Redbox Entertainment Inc. (“RDBX”). This communication
contains “forward-looking statements” within the meaning of the
federal securities laws. Forward-looking statements address a
variety of subjects, including, for example, projections as to the
anticipated benefits of the proposed transaction, the anticipated
impact of the proposed transaction on the combined organization’s
business and future financial and operating results, and the
expected amount and timing of synergies from the proposed
transaction. Statements that are not historical facts, including
statements about CSSE’s and RDBX’s beliefs, plans and expectations,
are forward-looking statements. Such statements are based on CSSE’s
and RDBX’s current expectations and are subject to a number of
factors and uncertainties, which could cause actual results to
differ materially from those described in the forward-looking
statements. Forward-looking statements often contain words such as
“expect,” “anticipate,” “intend,” “plan,” “believe,” "will,"
“estimate,” “would,” “target” and similar expressions, as well as
variations or negatives of these words. The following important
factors and uncertainties, among others, could cause actual results
to differ materially from those described in these forward-looking
statements: the uncertainty as to the extent of the duration, scope
and impacts of the COVID-19 pandemic; political and economic
uncertainty, including any faltering in global economic conditions
or the stability of credit and financial markets, erosion of
consumer confidence and declines in customer spending;
unavailability of raw materials, services, supplies or
manufacturing capacity; changes in geographic scope or product or
customer mix; changes in export classifications, import and export
regulations or duties and tariffs; changes in CSSE’s or RDBX’s
estimates of their expected tax rate based on current tax law;
CSSEs ability to successfully integrate RDBX’s businesses and
technologies; the risk that the expected benefits and synergies of
the proposed transaction and growth prospects of the combined
company may not be fully achieved in a timely manner, or at all;
adverse results in litigation matters, including the potential for
litigation related to the proposed transaction; the risk that CSSE
or RDBX will be unable to retain and hire key personnel; the
response of business partners and retention as a result of the
announcement and consummation of the transaction; uncertainty as to
the long-term value of CSSE’s common stock; and the diversion of
management time on transaction-related matters. These risks, as
well as other risks related to the proposed transaction, are
included in the registration statement on Form S-4 and proxy
statement/prospectus that was filed with the Securities and
Exchange Commission (the “SEC”) in connection with the transaction.
While the list of factors presented here is, and the list of
factors to be presented in the registration statement on Form S-4
are, considered representative, no such list should be considered
to be a complete statement of all potential risks and
uncertainties. For additional information about other factors that
could cause actual results to differ materially from those
described in the forward-looking statements, please refer to CSSE’s
and RDBX’s respective periodic reports and other filings with the
SEC, including the risk factors contained in CSSE’s and RDBX’s most
recent Quarterly Reports on Form 10-Q and Annual Reports on Form
10-K. Forward-looking statements represent management’s current
expectations and are inherently uncertain and are made only as of
the date hereof. Except as required by law, neither CSSE nor RDBX
undertakes or assumes any obligation to update any forward-looking
statements, whether as a result of new information or to reflect
subsequent events or circumstances or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220811005389/en/
Media Peter Binazeski Chicken Soup for the Soul
Entertainment pbinazeski@chickensoupforthesoul.com
Kathleen Toussaint Rooney Partners PR
ktoussaint@rooneypartners.com
Investor Relations Zaia Lawandow Chicken Soup for the
Soul Entertainment Zaia.Lawandow@redbox.com
Taylor Krafchik Ellipsis csse@ellipsisir.com (646) 776-0886
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