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Redbox Parent CEO Scott Di Valerio Departs

20 Jan, 2015 By: Erik Gruenwedel

Scott Di Valerio

Outerwall board said it was time for a leadership change

Outerwall, corporate parent of Redbox, Jan. 20 announced that CEO Scott Di Valerio has stepped down, in addition to resigning from the board.

Nora Denzel, a member of the board, will serve as interim CEO until a permanent replacement is found.

The Bellevue, Wash.-based kiosk company’s main asset is Redbox — the nation’s largest packaged-media rental service, headed by Mark Horak.

No official reason was given for Di Valerio’s ouster. But Outerwall did narrow fourth-quarter (ended Dec. 31) revenue guidance of about $598 million to $602 million, with pre-tax earnings from $140 million to $142 million.

Eric Wold, analyst with B. Riley & Co. covering Outerwall, said Di Valerio’s departure underscores increasing concerns about disc rentals.

Wold said Outerwall’s inability to drive pre-tax earnings after implementing a 25% rental price hike at Redbox suggests consumers are rebelling by renting less, holding discs for shorter periods and seeking out loss-leader promos, which cost Redbox money.

“Management noted to us that the price increase was meant to offset secular declines in the rental business and it seems as though the declines are worse than expected with this outlook – and the end result the CEO being terminated,” the analyst said in an email.

In a statement, Outerwall said it wanted to “capitalize on its market-leading brands” to drive profitability and deliver value for shareholders, partners and customers.

"To accelerate the progress we are making, the board believes that now is the right time for a leadership change,” chairman Nelson Chan said in a statement.

Outerwall reports fourth-quarter results Feb. 5.

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