Last month, Chicken Soup for The Soul Entertainment, the parent company behind Redbox, Crackel, and the streaming service of the same name, announced that the entire board of directors and board of managers of each subsidiary of the company other than William J. Rouhana, Jr., had been fired. This was quickly followed by news that Redbox was filing for bankruptcy.
Now, according to a report from Bloomberg, HPS has agreed to give the company an $8 million load, but as part of the deal, Redbox’s parent company must reinstate the independent members of its board that were fired last month. Now the judge over seeing this bankruptcy has agreed to the plan.
Before this, employees had not been paid and benefits like health insurance had been canceled. With this loan, employees will be paid and health insurance will also be funded.
Recently the company missed a $4 million payment to NBCUniversal as a part of its settlement over unpaid royalties. Now, it faces a possible order to pay all the $16.7 million it owes NBCUniversal as questions about the future of the company grow. NBCUniversal sued, saying Redbox had not been paying royalties. It agreed to a payment plan but had missed the first payment.
Chicken Soup for The Soul Entertainment is in a tough situation after acquiring Redbox in 2022 for $50 million in stock and assumption of $325 million in debt. Add in a shaky media environment with cratering ad revenue and quarterly losses, and the company’s future is very much in the air. In August, CEO Rouhana said that the company was holding a strategic review to evaluate its opportunities, which is business speak for putting itself up for sale.
Last year, Chicken Soup for The Soul Entertainment announced that it was in active discussions for a potential sale but so far nothing has come from these talks.
Like many media companies, the company has been hit by a soft ad market that has negatively impacted revenues. For a company that heavily relies on ad-supported streaming, this market must negatively impact the service. Right now, the company seems confident that they will be able to work through these issues and pay their partners. We will have to wait and see what happens.