Chicken Soup for the Soul fights for survival as NASDAQ delisting letter piles on woes

Bill Rouhana

Chicken Soup for the Soul Entertainment (CSSE) is fighting for survival after the company confirmed that the NASDAQ had threatened to delist it from the US stock exchange. 

CSSE, which has seen its share price fall almost 86% over the past 12 months, confirmed it had received a ‘Delinquency Letter’ on 18 April informing it that its shares could be delisted after the company failed to file its annual report by the deadline of 31 December 2023.

The company, which operates AVOD streamers including Redbox, Crackle and Chicken Soup for the Soul, subsequently filed its annual report a day later on 19 April.

It had until yesterday to request a ‘stay’ of the suspension, which it said it intended to do, providing it with time to file an appeal to NASDAQ, which will delay any delisting for a further 15 days from the date of request.

The development is the latest problem facing CSSE, which admitted late last year in an SEC filing that there was “substantial doubt” that it could “continue as a going concern”.

Part of the problem has been the effect of CSSE’s acquisition of US-based DVD rental firm Redbox, which it bought in 2022 along with the company’s $325m debt. That led to an impairment charge, with Q3 losses rising from $20m in 2022 to $433m in 2023.

The company, led by CEO Bill Rouhana, is also facing legal action from companies including NBCUniversal, which says it has not been paid royalties from DVD sales since mid-2022.

Earlier this month, NASDAQ told CSSE it could be delisted because its share price had fallen below $1 for an extended period.

CSSE had been looking to shift into streaming over recent years, with the acquisition of Redbox handing it the company’s Redbox Free Live TV FAST service, which offers almost 170 channels.

However, its shares plummeted last year after the US-based producer, distributor and AVOD operator admitted it was evaluating its “strategic opportunities” to provide it with a more secure financial footing.

Shares had almost tripled in value this week ahead of the latest delisting news, rising from 15c to 43c, but have subsequently fallen back to 26c. That’s down from $42 in June 2021 and $1.84 this time last year.

Prior to its financial woes, CSSE had been in acquisitive mode, picking up a majority stake in Indian prodco Locomotive Global in 2021 and buying the TV and film assets of the David Ellender-led LA prodco and distribution outfit Sonar Entertainment in April 2021, followed by the subsequent launch of scripted division, Halcyon TV.