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Analyst: Redbox Eyes Strongest Release Slate in Three Quarters

25 Apr, 2016 By: Erik Gruenwedel

Backed by a box office and release slate featuring year-over-year gains, Redbox is projected to see a stronger first-quarter (ended March 31) and second-quarter (ending June 30) rentals, according to B. Riley & Co. analyst Eric Wold.

“We believe the strongest rental slate in three quarters would not only stabilize rental revenue, but also drive stronger margins on the flow-through,” Wold wrote in an April 25 note.

Redbox is coming off a disappointing fourth quarter, which saw operating income fall 50% to $62.6 million from the previous-year period. Revenue fell 17% to $407 million; the $83.7 million decrease reflects a 24.3% decline in movie rentals year-over-year.

In March Redbox corporate parent Outerwall said it had initiated a process to “explore strategic and financial alternatives” to maximize shareholder value. Translation: The board was entertaining selling the company. Outerwall retained Morgan Stanley & Co. LLC as its financial advisor, and Perkins Coie LLP as its legal advisor to assist in the process.

Meanwhile, Wold projects a 13.5% decline in average revenue per kiosk as the top three releases — Star Wars: The Force Awakens, Zootopia, (Disney) and Deadpool (Fox) — represent 53% of the box office and figure to be popular sellthrough titles during that time period.

“Rental demand may not be as strongly correlated as in other quarters,” he wrote.

Redbox reports Q1 results after the market close April 28.

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