Crackle’s parent company, Chicken Soup for the Soul Entertainment, acquired Redbox in a streaming deal set against the hyperinflationary consumer economy.
Founded two decades ago during the DVD boom season, Redbox is known for its 38,000 kiosks with dazzling red drives in grocery stores and convenience stores. It just expanded into transmission and generation. It emerged last fall through a $693 million SPAC merger with Seaport Global Acquisition Corp. The stock initially surpassed $15, but has hit the rock in recent months and dropped as low as $1.61. The company had to lay off 10% of its employees and said it was looking for strategic alternatives.
The all-stock deal will make chicken soup an even bigger force for the soul in the growing ad-supported streaming industry. The IAB, an industry trade group, reported last week that related TV ads rose 57% in 2021 compared to 2020. Top players like Disney and Netflix have just announced their plans for their ad-supported services.
Chicken Soup for the Soul’s portfolio includes the service of the same name, which launched last fall, alongside Popcornflix, in addition to Crackle, which it acquired from Sony in 2020. The company also owns Screen Media.
The deal, which was approved by the boards of directors of both companies, calls for Redbox shareholders to receive a fixed exchange rate of 0.087 shares of Class Chicken Soup for Soul Entertainment per share of Redbox. Following the closing of the transaction, which is expected to take place in the second half of 2022, Chicken Soup for the Soul Entertainment shareholders own approximately 76.5% of United Company. Redbox shareholders own approximately 23.5% of United Company.
The company will continue to be listed on the Nasdaq under the CSSE brand.
In the deal announcement, Chicken Soup for Soul Entertainment said the combination is expected to be helpful in 2023. And experience for the scale of Redbox’s AVOD operations. The company expects synergies of more than $40 million in 2023. According to Chicken Soup for the Soul Entertainment, the combined company will close 2022 with $500 million in revenue and $100 million adjusted EBITDA of $150 million.
“Today is a milestone for Chicken Soup for Soul Entertainment and a milestone for the ad-supported broadcast industry,” said William J. Rouhana Jr., Chief Executive Officer. Combine additional equipment and services to create the streaming industry’s leading standalone AVOD. Redbox has more than 40 million users in its loyalty program and high potential digital TV assets, including over 130 FAST digital channels on its free live TV platform, as well as the powerful TVOD and PVOD platform. Together we will build the complete AVOD and FAST streaming business: proven branded streaming services, excellent content and production capabilities, and strong AVOD and FAST ad sales operations.
Redbox CEO Galen Smith said the deal “will accelerate Redbox’s transition from a fast-growing physical digital media company and become the only entertainment provider truly focused on customer value.” Redbox shareholders, he continued, will be able to tap into “the significant short- and long-term potential of a growing, diversified company at a larger scale and with greater resources.”
Rouhana said market conditions are encouraging mergers, as cable cuts continue and a large number of high-paying subscribers have emerged in the market in recent years. “In the short term, these conditions are exacerbated by increased macroinflation and economic uncertainty,” he said. We believe we can deliver more exciting world-class entertainment to millions of value-conscious viewers and further develop and create value for our shareholders.”
Source: Deadline
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