Employees robbed? Scandalous end for DVD rental company Redbox
Video rental company Redbox is so broke that it has to be liquidated. Employees report that they have been robbed.
A Redbox advertising motif from better times
(Image: Redbox)
Redbox, a US rental company for DVDs, Blu-Rays and online videos, is so insolvent that the company cannot be saved even by cutting its debts. The competent US federal bankruptcy court in Delaware has therefore ordered its liquidation. The red vending machines will probably disappear from US supermarkets and shopping centers. A report alleging that the management stole from the approximately 1,000 Redbox employees has caused a stir.
Redbox is known in the USA for its red vending machines, which rent out videos in stores and shopping centers. Customers with a credit card could remove the disks and return them to any of the red machines. The current operator is Chicken Soup for the Soul Entertainment, which in turn is a subsidiary of Chicken Soup for the Soul. Chicken Soup for the Soul Entertainment is the corporation that apparently no longer even has the funds for proper bankruptcy proceedings. According to its lawyer, there was only 25,000 dollars left in its coffers when the proceedings were opened. The parent company Chicken Soup for the Soul is not insolvent; it publishes books and sells dog and cat food.
Journalist Janko Roettgers has learned from Redbox employees that they did not receive their salaries in June. Even worse in some cases: Chicken Soup for the Soul Entertainment has not paid health insurance premiums for months – although it has noted corresponding deductions on pay slips. A loan taken out to restore health insurance, among other things, was too small to cover the insurance company's claim, so that the employees have now been uninsured for months. Redbox has reportedly not paid the taxes due on salaries for nine months. CEO and majority shareholder Bill Rouhana has denied the allegations.
Now there is a further accusation: the payslips regularly show the direct deduction of employees' contributions to their pension scheme (known as 401k in the USA). In fact, however, this money is also missing. The allegations have not been independently verified. heise online has sent a request for comment to the PR company (formerly?) working for Redbox.
Origin with milk from McDonalds
The red vending machines go back to a project by the McDonald's fast food chain. From 2002, it sold dairy products and other foods, diapers, condoms and other household supplies as well as DVDs around the clock from large red vending machines. The venture did not pay off and was discontinued the following year; however, a dozen red vending machines renting DVDs continued to operate.
In 2005, vending machine specialist Coinstar got on board; by 2007, Redbox had more locations than the then video rental market leader Blockbuster; in 2009, Coinstar acquired the entire Redbox company, which reported its one billionth DVD rental in 2010 (three billionth in 2013). In 2010, Redbox also began renting Blu-ray disks at 13,000 locations. Most Americans were closer to a Redbox than to a movie theater.
By 2008 at the latest, the major Hollywood film studios feared for their movie revenues because Redbox was easier to reach and much cheaper (1 dollar rent per day). Some studios only gave their films to Redbox some time after their theatrical release. The company felt that antitrust law had been violated and several lawsuits were filed, which ultimately ended in settlements. In 2010, cinema revenues in the USA exceeded revenues from video distribution for the first time again.
