Redbox’s distinctive bright red kiosks sell and rent DVDs at grocery and drug stores across America. On Friday, June 28th, parent company Chicken Soup for the Soul Entertainment (CSSE) filed for bankruptcy in Delaware.
The filing revealed that CSSE had been struggling financially for months. The company is nearly $1 billion in debt and owes millions to several other companies including Walmart, Walgreens, Universal, Sony Pictures, Warner Bros, and the BBC. But the more troubling revelation is that Redbox hadn’t paid employees for a week, and medical benefits had been suspended.
What Happened?
The company purchased Redbox in 2022 from the private equity firm Apollo Global Management. A deal that resulted in them taking on about $325 million in debt. Originally CSSE intended to combine its DVD rentals with its free streaming services, like Crackle, formally owned by Sony.
Unfortunately, none of this came to fruition given the unexpected bad timing of the acquisition. The dual Hollywood strikes by WGA and SAG delayed the development of new content. Along with the decline in customers renting physical media dug a hole the company couldn’t get out of. This same decline in DVD and Blu-Ray rentals caused Netflix to ditch that part of their service in 2023.
CSSE filing for Chapter 11 bankruptcy will not affect the company’s publishing arm, which produces the “Chicken Soup For The Soul” self-help books. This filing only applied to the company’s entertainment division.
While CSSE has declined to comment on the situation. We’ll keep you posted on updates about this filing as they develop.
