A year after Chicken Soup for the Soul Entertainment (CSSE) bought Redbox for $375 million, the company continues to be hit with losses and is looking to cut costs in all aspects of its business.
CSSE reported its second quarter 2023 earnings this week, showing a net loss of $43.7 million- more than double the $20.8 million it lost last year. However, the company also reported $79.9 million in revenue, up from $37.6 million in the second quarter of 2022. However, overall revenue failed to meet Wall Street’s expectations.
The poor results were largely thanks to the 2022 acquisition of Redbox for $50 million in stock and the acquisition of $325 million in debt.
To pay off its debt, CSSE said it wants to reduce operating expenses, end content acquisition deals, as well as focus on other revenue streams such as selling screen time on Redbox kiosk with third party advertisers.
The company recently struck a deal with TikTok to bring its popular content to more than 3,000 digital video screens at Redbox kiosks. Redbox is also expanding its partnership with Dollar General to roll out 1,500 more kiosks in its stores over the next two years.
CSSE announced during the earnings call that its Seattle-based office is closing, and employees will be working remotely. In January, the company reduced its workforce by 4%.
In addition, CSSE plans to convene a strategic review committee in the coming weeks to discuss various options. More importantly, Rouhana told Media Play News that the company is considering a potential sale or partnership but declined to elaborate.
“There were some questions that came our way that could be very serious, so we set up the committee,” Rouhana said.
During the call, Rouhana cited an uncertain media environment as the reason for its poor quarter, with the ongoing writer and actor strikes being the latest concern.
“There are a lot of changes in the media space and in the broader economy and it’s affecting everything,” Rouhana said. “This is an entire industry that is feeling some pain, but despite these changes, we are fully committed to growing our business and streamlining it in the most effective way, and we will do that. “
However, Rouhana believes the strikes will increase demand for library titles, giving Redbox a chance to prove its worth.
“We have a large catalog that we can monetize if there is a prolonged slowdown,” Rouhana added. “In other words, the longer the strike continues, the more valuable the library will be.”
Redbox generated $30.9 million in disc rental revenue in Q2, down from $32.3 million in the previous quarter. CSSE’s streaming business — Redbox Digital and Crackle Plus, among other platforms — earned $31.7 million, compared to $34.6 million in the first quarter.