Chicken Soup for the Soul Entertainment Inc. (RDBX) has filed for bankruptcy. The parent company of Redbox DVD kiosks provides self-help books as well as film and TV content. It faced financial woes after acquiring Redbox, a DVD rental company.
It filed for Chapter 11 protection, but it will continue to operate while it works on a plan to pay back its creditors. CWEB reports that the slowdown in DVD rentals and the rise of giant streaming platforms with huge budgets have contributed to the company’s financial decline.
Late Friday, Chicken Soup for the Soul Entertainment filed Chapter 11 protection in Delaware. It listed its assets and liabilities as the same amount of at least $500 million each.
The media company said that it is planning to sell some business units and restructure other businesses. It has new debt of approximately $20 million for the Chapter 11 bankruptcy process.
Court filing say that Chicken Soup for the Soul still has 24,000 Redbox DVD rental kiosks in different states of the nation. It also has Crackle, a free to stream service that runs on advertising revenue. The media company has 28,000 films and 40,000 TV episodes in its content library.
Chicken Soup for the Soul Entertainment was named after its popular feel-good books of the same name. Founded in 1993, the Connecticut-based company expanded into film and TV programming.
It later added video streaming and a premium pet food company to its portfolio of companies. It went public in 2017.
Chicken Soup for the Soul faced losses after it bought Redbox and expanded its DVD kiosks across the US. The strike in Hollywood and the earlier slowdown due to the pandemic decreased the number of titles available. The company also had liquidity problems that decreased its buying power of new titles.
CWEB thinks Chicken Soup for the Soul Entertainment must streamline its business model. To avoid bankruptcy, it must improve its streaming platform, acquire more popular DVD titles, and find the right balance between the two.
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