Redbox Kiosk News
Redbox, the last bastion of DVD rentals through its ubiquitous storefront kiosks, is selling to Chicken Soup for the Soul Entertainment for about $375 million in stock and debt. From Quad City Times May 2022
From Barrons: For Redbox, this deal is a financial lifeline. In the company’s 2021 10-K filing, the company warned that “the risks and uncertainties related to the ongoing adverse effects of the Covid-19 pandemic on the company’s operating results, together with the company’s recurring operating losses, accumulated deficit and negative working capital, raise substantial doubt about our ability to continue as a going concern.”
In Brief
- Dispensing DVDs at Walgreens/etc will continue
- $50 in Chicken Soup stock + assumption of $321 million in Redbox debt
- Revenues fell last year, by 50%, for Redbox ($288 million)
- Redbox laid off more than 10% of workforce
- Next “shiny thing” for investors is how to gain share in streaming market (netflix, amazon prime, eg)
- Redbox has 7 million kiosk interactions a month
- Redbox shares are trading for about six times the transaction price. Consider Twitter shares trading over $300 while awaiting completion of a deal priced at $54.20. On Friday morning, Redbox was up 10% to $2.95 a share. That’s for a stock that will be converted within three months into the equivalent Chicken Soup stock currently worth around 45 cents. Someone is not doing the math.
Barrons goes on in lengthy article about the specifics of the deal and why it is “so weird”.
The history of Redbox makes this situation even weirder. In 2016, former Redbox parent Outerwall was taken private by Apollo Global Management APO +0.57% ( APO ) for $1.6 billion. In addition to Redbox, Outerwall owned Coinstar kiosks (for cashing in loose change) and the ecoATM electronics-recycling kiosks. Apollo still owns Coinstar, and holds a majority stake in ecoATM. Outerwall, which originally used Coinstar as its corporate name, completed the purchase of Redbox in 2009.
More posts on Redbox and Coinstar
- Redbox Coming Soon! Kiosk Digital Signage(Opens in a new browser tab)
- DVD Kiosk – Redbox Revenue Drops 17% in Q4, as DVD Rentals Plummet(Opens in a new browser tab)
- Outerwall shuts down Redbox kiosks in Canada, beats Q4 earnings expectations – GeekWire(Opens in a new browser tab)