Redbox is shutting down, meaning dozens of DVD rental kiosks will soon be removed from all around San Diego County.
In a significant blow to physical media, Redbox is shutting down after more than two decades of offering DVD rentals through thousands of kiosks across the United States. Redbox's network of 24,000 DVD rental kiosks and its streaming services will cease operations following its parent company, Chicken Soup for the Soul Entertainment, converting its Chapter 11 bankruptcy case to a Chapter 7 liquidation proceeding on Wednesday.
With the move to liquidate its assets, all employees of Chicken Soup for the Soul Entertainment are now unemployed and will not receive severance or extended benefits. As of late June, the company employed 1,033 individuals.
Redbox’s business had been declining for over a decade before Chicken Soup for the Soul Entertainment acquired it in 2020. At its peak in 2013, Redbox generated $1.97 billion in revenue and operated more than 43,000 kiosks in the U.S. and Canada, stocked with movies, TV shows, and games.
On June 28, Chicken Soup for the Soul Entertainment filed for Chapter 11 reorganization, reporting total debts of $970 million and consolidated assets of $414 million as of March 31, 2024. Creditors include major entities such as Universal Studios Home Entertainment, Sony Pictures Home Entertainment, Warner Bros. Home Entertainment, Paramount Pictures, Lionsgate, BBC Studios Americas, Walgreens, Walmart, and Vizio.
On Wednesday, Judge Thomas M. Horan of the U.S. Bankruptcy Court for the District of Delaware approved the company’s request to convert to a Chapter 7 liquidation. He added that a bankruptcy trustee would be appointed to investigate whether funds held in trust for employees were misappropriated, as there is reportedly no money to pay staff.
Chicken Soup for the Soul Entertainment failed to pay employees and vendors for at least four weeks before its Chapter 11 filing. In court documents, HPS, the company’s top lender, alleged gross mismanagement by the company.
Chicken Soup for the Soul Entertainment chairman and CEO Bill Rouhana Jr., in a declaration supporting the bankruptcy petition, claimed that the company’s financial difficulties were partly due to "refusals" by its lenders "to live up to their obligations, resulting in asserted defaults and/or contractual terminations across critical content and service providers." Rouhana had unilaterally dissolved the company’s board of directors on June 11 and officially stepped down as CEO on June 24.
Chicken Soup for the Soul Entertainment acquired the struggling Redbox business in August 2020 in a deal valued at $370 million, assuming $359.9 million of Redbox’s debt. Rouhana stated that the company’s ability to service Redbox's debt was “predicated on a partial return to pre-COVID levels in the number and cadence of theatrical releases available to the company for its kiosk network, as well as cost synergies. The corresponding rebound in demand for physical kiosk rentals was expected to return to approximately one-third of 2019 levels.”
In addition to Redbox, Chicken Soup for the Soul Entertainment operated Crackle and other streaming services, producing, acquiring, and distributing films and TV series through its Screen Media and Chicken Soup for the Soul TV Group subsidiaries. The company, a subsidiary of Chicken Soup for the Soul LLC, also publishes the famous book series and produces pet food under the Chicken Soup for the Soul brand name.
Chicken Soup for the Soul Entertainment failed to pay employees and vendors for at least four weeks before its Chapter 11 filing. In court documents, HPS, the company’s top lender, alleged gross mismanagement by the company.
Chicken Soup for the Soul Entertainment chairman and CEO Bill Rouhana Jr., in a declaration supporting the bankruptcy petition, claimed that the company’s financial difficulties were partly due to "refusals" by its lenders "to live up to their obligations, resulting in asserted defaults and/or contractual terminations across critical content and service providers." Rouhana had unilaterally dissolved the company’s board of directors on June 11 and officially stepped down as CEO on June 24.
Chicken Soup for the Soul Entertainment acquired the struggling Redbox business in August 2020 in a deal valued at $370 million, assuming $359.9 million of Redbox’s debt. Rouhana stated that the company’s ability to service Redbox's debt was “predicated on a partial return to pre-COVID levels in the number and cadence of theatrical releases available to the company for its kiosk network, as well as cost synergies. The corresponding rebound in demand for physical kiosk rentals was expected to return to approximately one-third of 2019 levels.”
In addition to Redbox, Chicken Soup for the Soul Entertainment operated Crackle and other streaming services, producing, acquiring, and distributing films and TV series through its Screen Media and Chicken Soup for the Soul TV Group subsidiaries. The company, a subsidiary of Chicken Soup for the Soul LLC, also publishes the famous book series and produces pet food under the Chicken Soup for the Soul brand name.
There are dozens of Redbox kiosks sited around San Diego County. At this time it is not clear when the Redbox Kiosks will begin to close down.
The closure of Redbox marks the end of an era, reflecting a broader shift in the entertainment industry towards digital media and streaming services.
The closure of Redbox marks the end of an era, reflecting a broader shift in the entertainment industry towards digital media and streaming services.