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Chicken Soup for the Soul forms committee to explore strategic options after tough Q2

Chicken Soup for the Soul Entertainment (CSSE) is forming a strategic review committee to explore various options as the AVoD-focused company looks to reduce costs, pay down debt and improve its free cashflow.

William J Rouhana Jr

The Connecticut-based firm said yesterday that its revenue climbed to US$79.9m in the second quarter, up from US$37.6m in the same period a year ago, but its losses widened to US$43.7m, compared with US$20.8m a year ago.

“Given an increased level of strategic opportunities, we will be forming a strategic review committee of our board of directors to consider the various ways to unlock maximum shareholder value,” said chairman and CEO William J Rouhana Jr, who added during an earnings call that the company had received “incoming requests from financial and strategic partners.”

The strategic review committee will examine ways to ignite growth against a challenging economic backdrop, which Rouhana Jr said is impacting all media companies to a greater or lesser extent.

CSSE owns AVoD platforms including Crackle, Chicken Soup for the Soul and Redbox, production assets such as Halcyon Studios and Locomotive Global, and a network of around 29,000 kiosks for DVD rentals across the US.

Rouhana Jr said CSSE has been “actively de-risking” its business and, even prior to the strategic review, has been implementing cost-cutting measures including eliminating around 50 positions since the start of the year.

He also said that if the strike continues for the remainder of the year, be believes the value of CSSE’s catalogue will increase.

“We have a large catalogue that we can monetise in the event of the prolonged slowdown,” said Rouhana Jr. “In other words, the longer the strike continues, the more valuable the library becomes.”

Over the past 12 months, publicly traded CSSE has seen its stock price fall from almost US$12 per share last August to US$1.01 yesterday. Following the release of its second-quarter results, the share price was down around 30% in after-hours trading.

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