A year after Chicken Soup for the Soul Entertainment (CSSE) purchased Redbox for $375 million, the company continues to be hit by losses and looks to reduce costs across all aspects of its business.
CSSE reported its second quarter 2023 earnings this week, which showed a net loss of $43.7 million– more than double the $20.8 million it lost in the year-ago period. However, the company also reported $79.9 million in revenue, up from $37.6 million in the second quarter of 2022. Still, total revenue failed to live up to Wall Street expectations.
The poor results were in large part thanks to the 2022 acquisition of Redbox for $50 million in stock and the assumption of $325 million in debt.
To pay down its debt, CSSE says it wants to cut down on operating expenses, hold off on content acquisition deals, as well as focus on other revenue streams like marketing Redbox kiosk screen time to third-party advertisers.
The company recently struck a deal with TikTok to bring popular content to over 3,000 digital video screens at Redbox kiosks. Redbox also expanded its partnership with Dollar General to roll out 1,500 more kiosks to its stores over the next two years.
CSSE announced during the earnings call that it is shutting down the Seattle-based office, and those employees will work remotely. In January, the company reduced its workforce by 4%.
Additionally, CSSE plans to assemble a strategic review committee in the coming weeks to discuss an array of other options. Most notably, Rouhana told Media Play News that the company is considering a potential sale or partnership but declined to elaborate.
“There have been some inquiries that have come our way that could be pretty serious, which is why we are setting up the committee,” Rouhana said.
During the call, Rouhana cited the uncertain media environment as being the cause of its unsatisfactory quarter, with the ongoing writer and actor strikes being the newest concern.
“There have been massive changes in the media space and in the broader economy and they’re affecting everyone,” 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 cost-effective way, and we’re capable of doing that.”
However, Rouhana believes the strikes will increase the demand for library titles, which gives Redbox a chance to prove its worth.
“We have a large catalog we can monetize in the event of a prolonged slowdown,” added Rouhana. “In other words, the longer the strike continues, the more valuable the library becomes.”
Redbox generated $30.9 million in disc rental revenue in Q2, slightly 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.