Last week, Chicken Soup For The Soul, the parent company behind Redbox, Crackel, and the streaming service by 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., have been fired. This was quickly followed by news that employees had not been paid and benefits like health insurance had been canceled.
Now, according to a report from Deadline, the company has filed for Chapter 11 bankruptcy protection. This comes as the company has reportedly told employees it hopes to get a loan to pay employees next week.
Recently 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 of the $16.7 million it owes NBCUniversal as questions about the future of the company grow. This comes after NBCUniversal sued, saying Redbox had not been paying royalties. It agreed to a payment plan but has now missed the first payment.
Chicken Soup For The Soul is in a tough situation after acquiring Redbox in 2022 for $50 million in stock and an assumption of $325 million in debt. Add on top of that 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 William J. Rouhana said that the company was holding a strategic review to evaluate its opportunities, which is business speak for putting itself up for sale.
Chicken Soup for The Soul last year announced that it was in active discussions for a potential sale back in October of this year but so far nothing has come from these talks.
Like many media companies, they have likely been impacted by a soft ad market that has negatively impacted revenues. For a company that heavily relies on ad-supported streaming, this market has to negatively impact the service. Right now, the company seems confident that they will be able to work through these issues and pay their partners. For now, we will have to wait and see what happens.
Chicken Soup for The Soul has not replied to our request for comment at the time of this posting.