Troubled Redbox Parent Chicken Soup For The Soul Entertainment Is Nearly A Week Late Paying Employees; Medical Benefits Also Cut

EXCLUSIVE: In the latest sign of trouble for Redbox parent Chicken Soup for the Soul Entertainment, the company’s employees say they have not been paid in nearly a week and their medical benefits have been suspended.

Eight current workers, all of whom wished to remain anonymous out of fear of retaliation, provided Deadline with a glimpse inside the struggling company, supporting their assertions with a raft of internal emails. A number of frustrated workers have also started to vent in Reddit forums and across social media.

One senior executive said no updates about the status of pay have been provided since last Friday, when workers were warned that direct deposit would hit over the weekend or on Monday instead of the scheduled time on Friday. CEO Bill Rouhana was reported to be convening a management meeting early this evening to offer a status report. “We haven’t heard anything over the past couple of days,” the senior executive told Deadline. “Initially, they said checks would go out Tuesday at the latest. And now here we are.”

Chicken Soup for the Soul Entertainment, which spun off from the self-help publishing brand in 2017 and became a publicly traded company, had 1,194 direct employees at the end of 2023. The company has grown steadily via a series of acquisitions, including those of streaming service Crackle, film outlets Screen Media and 1091 Pictures and production entity Sonos Entertainment. Over the nearly two years since its riskiest M&A deal, the $375 million takeover of video kiosk operator Redbox, the company has hit the rocks amid mounting concerns about its debt load and ability to meet financial obligations.

Investors have largely moved to the sidelines after lifting the company’s stock north of $40 a share three years ago due to the then-prevailing optimism about all things streaming. The stock closed Wednesday at just 21 cents a share, in the range where it has traded for much of the past year, and the Nasdaq has warned it will delist the company if the share price remains this low much longer. In another major twist, the company disclosed last week that an unnamed shareholder controlling more than 75% of Class A and Class B shares removed CSSE’s entire board of directors except for Rouhana, who is chairman as well as CEO. The filing cited a Delaware law permitting such a move with or without cause.

The company did not respond to a request for comment from Deadline.

According to employees, internal emails regarding payroll flagged the delay starting last Friday, recommending that employees seek reimbursement for any bank fees incurred as a result.

Medical benefits, meanwhile, have been suspended since mid-May. The company acknowledged the lapse in coverage in a pair of emails to employees last week, urging some pretty extreme measures to help the company weather the storm.

“We recommend all elective, non-urgent and routine medical appointments be rescheduled until we can provide your medical providers the details of how to process claims,” one of the company-wide emails, an unsigned message from askbenefits@chickensoupforthesoul.com, said on June 20. “Please use your best judgment on whether or not you can reschedule any of your appointments.”

The other message, on June 21, said insurance provider Anthem “terminated our plan and is denying all claims as of May 14, 2024. Any claims submitted after May 13, 2024 will be denied, regardless of the date of service.”

The message continued, “We understand the importance of fixing this issue and are actively working to resolve this matter as quickly as possible. We are in contact with Anthem and have been working on a resolution as soon as possible.”

Bonuses and 401(k) matches were suspended at the end of 2023, and the company has faced lawsuits from a number of vendors, including filmmakers, after fees were withheld for acquisitions.

Several forces conspired against the Redbox deal from the start. Physical disc rentals have been in marked decline, though Rouhana has long contended that the cash flow would be considerable even if the sector continued its downtrend. Netflix exited the DVD rental business last year, at the same time dual strikes by the WGA and SAG/AFTRA choked the pipeline of new releases and pushed a number of marquee titles into the second half of 2024 and beyond.

Inside Redbox, there has been a growing sense that reinvention would be essential in order to remain a viable operation even if the traditional film slate returned to some semblance of itself. The company has recently emphasized its service capabilities, deploying workers to maintain the likes of Amazon Lockers or Pokemon retail vending machines.

“Redbox should be thought of as a service client,” Redbox SVP Jeff Jopa explained to employees in an email in May. “We will move forward and build on our expertise and amazing people.  We have a myriad of differentiated offerings that other service providers can’t touch.”

On Friday, as restlessness was growing over the health care disruption, which was the second in a six-month span, according to internal emails, Jopa sought to reassure his division.

“Our company is in a very painful period of transition,” he wrote in an employee memo obtained by Deadline. “We are temporarily stuck in this moment of pain and uncertainty. It’s scary. It feels unfair. If you’re running out of hope, it is understandable. If you’re frustrated or angry, I get it. We are expecting resolution in the coming days while not fully knowing what that looks like.”

As far as the medical benefits, he said, “we are still awaiting next steps.” He described a “holding pattern” being in effect. 

“I am (still) proud to be part of Redbox and the privilege to work with you. I ask that when we hopefully get to brighter days ahead, we move forward as a team and focus on the positive opportunities and business wins to come,” Jopa wrote. “I am here to support you and your leaders in any way you need. As always, thank you for who you are and what you do.”