Citing difficulties in the economy and streaming business, Chicken Soup for the Soul Entertainment said it is taking steps to generate short-term cash flow savings and has formed a strategic review board committee.
On the company’s earnings call Monday, CEO William Rouhana said the company has had incoming requests from potential financial and strategic partners.
The board committee will “evaluate these opportunities and will pursue transactions that check all the boxes in creating value for our shareholders and this is clearly not reflected in our stock price,” Rouhana said.
In the second quarter, Chicken Soup for the Soul had a net loss of $43.7 million, or $1.50 a share. That compares to a $20.8 million loss, or $1.39 a share, a year ago.
Net revenue doubled to $79.9 million from $37.6 million a year ago.
The company's stock closed Monday at $1.01 a share, near its low for the year, then dropped in after-hours trading to 79 cents a share.
Rouhana said that the company has taken numerous steps to create short-term cash flow savings of as much as $30 million.
“We believe we have to be very careful and make decisions that underscore our commitment to paying down debt and generating free cash flow. In other words, we need to adapt to the current market conditions,” he said. “We recently conducted a review of all our operations to identify ways to drive greater cash flow and we've already begun implementing those changes.”
The changes include reworking some agreements to produce original programing that wouldn't produce short-term cash flow; scaling its FAST platform and service businesses including its Crackle Connex ad rep business and putting its content sales business into overdrive.
Rouhana noted as the strikes by the writers and actors unions continue, demand for content is increasing. “We have a large catalog. We can monetize that in the event of a prolonged slowdown. And in other words, the longer the strike continues, the more valuable the library becomes,” he said.
The company has identified certain assets that are non-core operations and that can be monetized. It is also looking to cut general and administrative costs and has reduced headcount by 50 people since January.
"This is an entire industry which is feeling some pain, but despite these changes, we are fully committed to growing our business and streamlining it in the most cost effective way and we're capable of doing that,” Rouhana said.
