Redbox Fails To Pay $4 Million To NBCUniversal As It Fires Its Board (cordcuttersnews.com) 26
An anonymous reader quotes a report from Cord Cutters News: Earlier this week, Chicken Soup For The Soul, the parent company behind Redbox, Crackel, and the streaming service by the same name, announced that the entire board of directors and board of managers of each subsidiary of the Company other than William J. Rouhana, Jr., have been fired. This comes as a holder of more than 75% of the voting power of the company used his stock holdings to lay off the Company's board of directors. Now, it has come out that the company missed a $4 million payment to NBCUniversal as a part of its settlement over unpaid royalties. Now it faces a possible order to pay all of $16.7 million it owes NBCUniversal as questions about the future of the company grows. This comes after NBCUniversal sued saying Redbox had not been paying royalties. It agreed to a payment plan but now has missed the first payment of the plan.
Recently the company has been hit hard by the decline in ad revenue on its free streaming services and the drop in DVD rentals at its Redbox locations. This has led to the company seeing its revenues drop 75% in the 1st quarter of 2024 compared to the same period of 2023, according to a SEC filing first spotted by NextTV. Chicken Soup For The Soul is in a tough situation after acquiring Redbox in 2022 for $50 million in stock and an assumption of $325 million in debt. Add on top of that a shaky media environment with cratering ad revenue and quarterly losses, and the company's future is very much in the air. In August, CEO William J. Rouhana said that the company was holding a strategic review to evaluate its opportunities, which is business speak for putting itself up for sale. Chicken Soup for The Soul last year announced that it was in active discussions for a potential sale back in October of this year but so far nothing has come from these talks.
Recently the company has been hit hard by the decline in ad revenue on its free streaming services and the drop in DVD rentals at its Redbox locations. This has led to the company seeing its revenues drop 75% in the 1st quarter of 2024 compared to the same period of 2023, according to a SEC filing first spotted by NextTV. Chicken Soup For The Soul is in a tough situation after acquiring Redbox in 2022 for $50 million in stock and an assumption of $325 million in debt. Add on top of that a shaky media environment with cratering ad revenue and quarterly losses, and the company's future is very much in the air. In August, CEO William J. Rouhana said that the company was holding a strategic review to evaluate its opportunities, which is business speak for putting itself up for sale. Chicken Soup for The Soul last year announced that it was in active discussions for a potential sale back in October of this year but so far nothing has come from these talks.
DVD rentals? (Score:2)
Did DVD rental revenue drop in half when one of the last two people renting DVDs died of old age?
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...with that said, though, yeah, I usually end up streaming, because I'm lazy, and it's so much easier to stream your fifth choice of what you want to watch, which is right there on your computer, rather than go find the DVD with your fir
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Well, if you like DVD so much, have you tried BluRay?
Re: DVD rentals? (Score:2)
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That's why I prefer to have someone else do it for me.
I could buy DVDs, because I knew I could watch them (though illegally). BluRay doesn't come with that same assurance, so I just pirate it and deny revenue to the copyright holder who didn't want me to be able to watch the movie that I would have bought.
Scream "fuck off" at customers, and they'll eventually stop being customers.
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For the record: My local Goodwill store sells DVD/BluRay for $2.50 each.
Just the other day a guy bought seven Harry Potter movies, over half BluRay, for $17.50.
On that same day I bought the first three X-Men movies in a DVD box set for $5.
My point: It can be ridiculously cheap to get a good BluRay collection nowadays if you're willing to be patient. (Oh, and I've yet to ever get a bad disc.)
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>"Did DVD rental revenue drop in half when one of the last two people renting DVDs died of old age?"
BluRay, not DVD, but I must be one of the two you are talking about. Although I am not really old enough to die of old age. I loved Netflix Disc and was very upset when it went poof. It was a cost-effective way to watch most anything I wanted in very high-quality as a regular TV supplement. Had good ratings and recommendation tools as well. Just set up a queue of interesting things, and stuff arrives.
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Hey don't shoot the messenger, I was just quoting the summary.
*dances on your lawn*
When I hit hard times (Score:2)
This should comfort you as NBCUniversal stabs you with the $16.7 million balloon payment, sends you into bankruptcy, then buys your very Soul on the cheap.
Welcome to capitalism, have a good time
DVD Jukebox (Score:3)
When Redbox goes the way of Blockbuster, the only "real estate" they really have a commodity on is the Redbox machines themselves.
They should take this opportunity to re-sell them to consumers as DVD Jukeboxes. Might be kind of a cool way to organize an aging DVD/Blu-Ray collection. Sell them to retirement homes if a market struggles to present itself.
If you have license to dump the physical media with the box, donate them to military personnel deployed in remote/classified environments where streaming connections aren't viable. Probably a bit more entertaining than playing spades. Again.
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Well, Blockbuster locations were turned into many things around the country.
Blockbuster wasn't a mistake, it was just outmoded by the BluRay v. HD-DVD battle. As a company dependent on buying in advance, they had no hope of chosing what disc to buy next during that dispute.
Re:DVD Jukebox (Score:5, Insightful)
People tend to forget that Blockbuster also tried their own DVD delivery service like Netflix, but pulled the plug on it when it started to be successful and they realized that it was cannibalizing the sales of their brick and mortar stores.
It's kind of hard to feel sorry for a business with management that foolish.
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You don't need a license to sell dvds you own (first sale doctrine)
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You don't need a license to sell dvds you own (first sale doctrine)
If Redbox owns it all outright, what exactly are they in debt to NBCUniversal for again?
"Royalties" sounds an awful lot like a license to use someone else's property, which would tend to imply you don't own it.
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It seems they have a video-on-demand service, as well. I did some digging, and this 2017 article says they signed an agreement with Universal to have rentals available the same day the retail version was released:
https://variety.com/2017/digit... [variety.com]
So, it looks like some kind of physical media deal was in place, as well as for its video-on-demand service. Without seeing the actual agreement, who knows what was in it.
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And this article on Redbox selling the code for a digital download from Disney dvd bundles was very interesting, as well:
https://copyrightandtechnology... [copyrighta...nology.com]
Although it doesn't seem to have anything to do with the royalty issue.
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You don't need a license to sell dvds you own (first sale doctrine)
The may not actually own them but have cut a deal with distributors to rent them and then return them or sell them after a fixed period.
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There's an abandoned one near me that hasn't been plugged in in 18 months.
I wonder how I can haul it away and repurpose the robot.
Step 3: Profit? (Score:2)
Is Redbox profitable? Seems that they're stiffing NBCU because they don't have the cash available....
Re:Step 3: Profit? (Score:4, Interesting)
I'd be surprised if they see all $16.7 million, Redbox presumably has more than a few other creditors and assets of fairly nebulous value outside of the specific business model that is apparently failing; but would not be surprised if NBCU has concluded that they are in a better position if they get the judgement they are looking for here and get to be the creditor on that basis rather than on the basis of the prior contracts that Redbox hasn't been paying; or that this case will give them some opportunity to do some internal poking at why exactly Redbox isn't paying them.
It would also be interesting to know what NBCU's calculus is in terms of judging the actual cost of what they are supplying to Redbox: contractually they had the option to just cut them off relatively quickly after they stopped paying; but they have not done so. That seems to suggest some combination of willingness to accept heavily risk-discounted payment(presumably helped by content licensing having fairly low per-unit costs); and potentially a view that Redbox customers are not necessarily people who would just go to one of the outfits that does pay NBCU if they were to terminate the deal.
What puzzles me a bit is why they would be continuing both the streaming and DVD deals when they are getting paid for neither and(at least as I understand from the filing) could terminate one or the other separately. The DVD rental market is not exactly thriving at the moment; so it's not like NBCU has just tons of options for catering to people who want DVDs but aren't going to pay full price for something they'll watch once; but having a streaming service that's cheap because it doesn't pay its bills directly competing with their pet streaming service and the various competing ones that do pay their royalties seems less obviously useful.
Waitaminute... (Score:2)
Killing the revenue stream doesn't earn royalties (Score:3)
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"NBCUniversal should cut them some slack and work out a payment deal or forebear for awhile. "
Except NBCU already did that once. The $4 million missed payment was the first payment in that deal. How manty rounds should NBCU go before they decide there's no blood left in that stone?
I have never used Redbox.... (Score:2)