Redbox, the American company that rents DVDs, Blu-rays and online videos, is so bankrupt that even a haircut cannot save the company. So the responsible US federal bankruptcy court in Delaware has ordered liquidation. Red machines will probably disappear from US supermarkets and shopping centers. There is a stir over a report that management has stolen from about 1,000 Redbox employees.
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Redbox is known in the US for its red vending machines that rent videos in stores and shopping centers. Customers with a credit card can take the vending machines and return them to any red machine. The current operator is Chicken Soup for the Soul Entertainment, which in turn is a subsidiary of Chicken Soup for the Soul. Chicken Soup for the Soul Entertainment is the corporation that apparently does not even have the funds for proper bankruptcy proceedings. According to their lawyer, there were only $25,000 left by the time the case was opened. The parent company, Chicken Soup for the Soul, is not bankrupt; she publishes books and sells dog and cat food.
Journalist Janko Roettgers learned from Redbox employees that they will no longer receive a salary in June. In some cases, even worse: Chicken Soup for the Soul Entertainment has not paid its health insurance premiums for months – even though it mentioned the corresponding deduction on the pay slip. Among other things, the loan taken to reclaim health insurance was too small to cover the insurance claim, so employees have now been uninsured for months. Redbox is said to have not paid the tax due on salaries for nine months. CEO and majority owner Bill Rouhana has denied the allegations.
Now there’s another allegation: pay slips regularly show direct deductions of employees’ contributions to their pension plan (known as a 401k in the USA). In fact, this money is also missing. The allegations have not been independently confirmed. Heise Online has sent a request for comment to the PR company that (formerly?) worked for Redbox.
Originated from McDonald’s milk
The red machines are the result of a project by the McDonald’s fast food restaurant chain. Starting in 2002, it sold dairy products and other food, diapers, condoms and other household supplies, as well as DVDs, around the clock through large, red vending machines. The venture was not successful and was abandoned the following year; but a dozen red machines offering DVD rentals continued to operate.
In 2005, slot machine specialist Coinstar joined; in 2007, Redbox had more locations than then-video rental leader Blockbuster; in 2009, Coinstar acquired the entire Redbox company, which reported its billionth DVD rental in 2010 (three billionth in 2013). In 2010, Redbox also began renting Blu-ray Discs at 13,000 locations. Most Americans were closer to a Redbox than a movie theater.
By 2008 at the latest, major Hollywood film studios feared for their cinema revenues because Redbox was easy to access and quite cheap (renting at $1 per day). Some studios did not deliver their films to Redbox until some time after their theatrical release. The company felt antitrust law had been violated and several legal proceedings took place that eventually ended in settlement. In 2010, cinema revenues in the United States exceeded revenues from video rentals for the first time.
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