Page 2: Redbox takes over Blockbuster Express

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In 2012, Redbox acquired its competitor Blockbuster Express and ventured into Canada. In the following year, Redbox was able to rent out a video disk a total of 773 million times and also started selling tickets in Los Angeles. In Canada, however, the influx of consumers to the DVD rental machines was modest; the 1,400 machines distributed there moved to the USA in 2015. In 2014, more than half of all DVD rentals in the USA were made through the 44,000 red boxes at the time.

In 2016, Redbox also began renting out computer games. The following year, the company opened a website where customers could stream films for a fee. In 2019, Redbox also founded its own film production company, but stopped renting out computer games again. A free web TV service was added in 2020. In 2021, Redbox had 39 million customers who rented videos, either online or from the red machines. But revenue fell year after year.

Via SPAC into the mishap

Nevertheless, Redbox managed to go public in 2021 – via SPAC (Special Purpose Acquisition Company). Such a company is only founded to collect money from investors, then to be listed on the stock exchange without any actual business activities, and finally to merge with a company that is not yet listed - in this case Redbox: Redbox - to merge. This was in vogue around 2020; it is a quicker and cheaper way for the acquired company to go public.

However, many such SPAC constructs have not brought much joy to investors, with Wework being a prominent example. Just six months after the IPO, Chicken Soup for the Soul agreed to acquire the majority of Redbox, henceforth officially known as Chicken Soup for the Soul Entertainment. The purchase was largely loan-financed, so Redbox also had to carry this burden. In the end, 80 percent of the voting rights in Chicken Soup for the Soul Entertainment belonged to CEO Bill Rouhana, who also owns Chicken Soup for the Soul.

Piles of bills and lawsuits

In 2022, the year of the takeover, Redbox turned over almost 253 million dollars, but had a negative cash flow of almost 63 million dollars with an operating loss of 117 million dollars and a net loss of 111 million dollars. Things got worse in 2023: although turnover climbed to 294 million dollars with a negative cash flow of 23 million dollars, the operating loss exploded to 556 million dollars and the net loss to 637 million dollars. The lower negative cash flow was officially due to the use of factoring and the waiver of high-priced film rights for the streaming portal; however, Redbox actually stopped making contractually agreed payments for film rights in the summer of 2022, as a successful lawsuit by NBCUniversal shows. Redbox is also likely to have owed stand rental fees, with some landlords literally pulling the plug.

At the beginning of 2024, only 3.3 million dollars remained in the cash register, with unpaid invoices amounting to 35 million dollars. The end could no longer be avoided. Rouhana failed to make a clear cut. For example, the company's credit cards were blocked, leaving vehicles stranded because employees could no longer refuel them. At the beginning of June, the lessor obtained a court order to return 400 vehicles due to unpaid installments. Without cars, Redbox can neither maintain nor stock the approximately 24,000 remaining machines that bear its name.

On June 10, Redbox missed a court-ordered installment payment to NBCUniversal in the amount of four million dollars. This meant that the total amount of 16.7 million dollars was due at once. It wasn't until June 29 that the bankruptcy filing followed, Rouhana had to vacate the chief executive position – the plan was to continue the company after debt reduction. The insolvency court buried this idea on Wednesday. The 1,000 employees are left with outstanding salaries and have to organize their own health insurance. The fate of their pension funds is unclear.

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