Just six months after its SPAC IPO, Redbox Entertainment said in an 8-K filing to the SEC that the company is laying off 10% of its 1,467 employees. Redbox says the workforce cut is due to COVID-related movie supply chain issues which are inevitably crushing its kiosk rental business.
The company said that the job cuts will reduce its annual operating costs by about $13.1 million while sustaining a one-time charge of $3.8 million to cut ties with its workers, mostly to cover severance. The layoffs took effect on March 29.
In a previous 8-K filing in January, the company revealed financial troubles, particularly saying that it was cashing out the remaining funds on a $15 million revolving credit facility it had established prior.
Redbox said in its January SEC filing, “During the fourth quarter of 2021, Redbox had 24 theatrical releases, which was lower than expected. In addition, the significant increase in impacts from the omicron variant caused disruption to the business. As such, Redbox rentals have not recovered to the extent expected and, notwithstanding the year-over-year increase in new releases, were lower than the fourth quarter of 2020. Historically, rentals have been correlated with the number and quality of new theatrical titles released in a quarter.”
Currently, we are unsure of just how severe Redbox’s fiscal fourth quarter was because the company asked the SEC for a postponement on its annual 10-K filing, citing the expense and effort it would require to put the document together.
However, for the nine months that ended on Sept. 30, 2021, Redbox lost $92.9 million, over double the net loss of $39.1 million for the third quarter of 2020. The company had revenue of $216.4 million for the first nine months of 2021, down 53% from the year-earlier period. As of Sept. 30, Redbox had $361.9 million in net long-term debt.
Redbox stated that it has been “actively taking steps to decrease monthly costs, delay capital expenditures and increase revenues.” The company has been “exploring a number of potential strategic alternatives with respect to the company’s corporate or capital structure and seeking financing to fund operations and one-time restructuring costs.”
Known for its nationwide network of 40,000+ DVD and Blu-ray, red-colored rental kiosks, which still operate inside thousands of locations, the 20-year-old Redbox has expanded significantly. The slowdown comes at a particularly exposed time for the company, which is investing heavily in ad-supported video streaming, as well as its own movie production operation. Adding a production and acquisition arm called Redbox Entertainment, the company aims to pump out dozens of films in the relatively near future. In addition, Redbox struck a distribution deal with Lionsgate last October.
Redbox
Redbox is a free ad-supported video streaming service with dozens of live streaming channels and on demand movies. Users can also rent or buy movies through the platform.