Chicken Soup for the Soul Entertainment’s late 2023 10-K filing with the Securities and Exchange Commission served as a stark revelation of the company’s deepening financial troubles. The reported net loss of $636.6 million for the year, a sharp escalation from the $111.2 million loss in 2022, painted a bleak picture of Chicken Soup’s fiscal health. This significant downturn prompted the company to issue a dire warning in its filing: without securing additional financing, Chicken Soup faced the prospect of scaling back or even ceasing its operations, potentially necessitating recourse to bankruptcy laws for protection.
Adding to Chicken Soup’s woes, a delisting notification from the Nasdaq earlier in the month cast further shadows over its future prospects. In its 10-K filing, the company attributed its financial distress in part to the formidable challenges encountered in integrating recent acquisitions, which included Redbox, 1091 Pictures, Crackle, and Sonar assets. Despite the perceived value of these acquisitions, Chicken Soup lamented its inability to realize the anticipated benefits due to unsuccessful integration efforts and adverse operational impacts.
While Chicken Soup’s DVD rental kiosk business saw a modest upturn in revenue, with a 66% increase to $112.7 million, its streaming ventures under the Crackle and Redbox brands faced significant headwinds. Sales for these streaming businesses plummeted by 28% to $104 million, underscoring the company’s struggles to program its channels effectively and drive audience engagement, subscription, and advertising revenue.
Amidst its financial turmoil, Chicken Soup found itself besieged by lawsuits from unpaid vendors and programming partners. Reports emerged of settlements reached for debts owed to these entities, underscoring the severity of the company’s financial predicament. The most recent lawsuit, detailed by showbiz trades, involved a consultant who played a role in Chicken Soup’s $370 million acquisition of Redbox in 2022, further adding to the company’s legal woes.
Trading at a mere 15 cents per share as of late-day trading on Tuesday, Chicken Soup for the Soul Entertainment faces an uncertain future as it grapples with mounting financial challenges and legal liabilities. Despite its efforts to navigate these turbulent waters, the company finds itself at a critical juncture, with its very survival hanging in the balance.