Chicken Soup for the Soul Entertainment, the parent company of DVD rental operator Redbox, has filed for Chapter 11 bankruptcy protection, marking a significant downturn for a once-prominent player in the entertainment industry.
This legal maneuver comes in the wake of protracted financial difficulties and mounting unpaid debts.
The bankruptcy filing, submitted to the Delaware bankruptcy court, reveals the staggering extent of the company’s financial distress. Chicken Soup for the Soul has amassed nearly $1 billion in debt, a figure that dwarfs its reported assets of $414 million as of March 2023.
The company’s creditor list, exceeding 500 entities, spans a diverse range of industries. It includes major entertainment conglomerates like Sony Pictures and Warner Bros., as well as retail giants such as Walgreens and Walmart, highlighting the far-reaching impact of the company’s financial struggles on various sectors of the economy.
Chicken Soup for the Soul’s acquisition of Redbox in 2022 was initially presented as a strategic move to create a multifaceted entertainment conglomerate. However, this merger, which included the assumption of Redbox’s $325 million debt, appears to have exacerbated the company’s financial woes rather than alleviating them.
The decline of Redbox’s physical presence is emblematic of broader shifts in media consumption. The number of Redbox kiosks has decreased from 36,000 at the time of acquisition to approximately 27,000 currently, reflecting the challenges faced by traditional DVD rental services.
Despite diversification efforts into ad-supported streaming and video-on-demand services, including Redbox Live TV and Crackle (acquired from Sony), Chicken Soup for the Soul has been unable to stem its financial losses. The company’s stock has plummeted by over 90% in the past year.
This bankruptcy filing not only signifies a critical juncture for Chicken Soup for the Soul Entertainment but also serves as a case study in the risks associated with acquisitions in the rapidly evolving media industry.