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Communications Services Sector Declines Amid Anticipation of Lower Merger and Acquisition Activity
ByAinvest
Monday, Jul 1, 2024 5:23 pm ET1min read
Communications Services stocks dipped as concerns over deal activity slowdowns weighed on the sector. Paramount Global's shares declined, while Redbox and Chicken Soup for the Soul Entertainment faced bankruptcy after amassing substantial debt.
The Communications Services sector experienced a downturn on concerns over deal activity slowdowns. Paramount Global and subsidiaries Redbox and Chicken Soup for the Soul Entertainment were among the hardest hit.
According to a recent filing with the U.S. Bankruptcy Court in Delaware, Chicken Soup for the Soul Entertainment, the parent company of Redbox, has declared bankruptcy. The company reported debts of approximately $970 million and assets of about $414 million [1]. Debtors include major entertainment and media companies like Universal Studios, Sony Pictures, and BBC Studios Americas, as well as retailers such as Walgreens and Walmart [1].
Founded in 1993, Chicken Soup for the Soul started as a publisher of motivational books, known for their uplifting stories and inspirational titles like "From Lemons to Lemonade" and "Angels Among Us" [1]. In 2022, the company acquired Redbox, a DVD rental service known for its distinctive red kiosks outside supermarkets and pharmacies [1]. Redbox has about 27,000 kiosks across the United States [1].
Paramount Global, which owns ViacomCBS and CBS, also experienced a decline in its stocks, with shares dropping by 2.4% on June 30, 2024 [2]. The company's financial performance has been affected by a decline in advertising revenue due to fewer live sports events and the ongoing pandemic [2].
Redbox and Chicken Soup for the Soul Entertainment, meanwhile, have faced financial challenges due to substantial debt. Chicken Soup for the Soul has reportedly been unable to pay its employees for two weeks and has requested relief to do so [1]. The company has approximately 1,000 full- and part-time workers [1].
Sources:
[1] Ruberg, S. (2024, June 30). Chicken Soup for the Soul Entertainment Files for Bankruptcy. The New York Times. https://www.nytimes.com/2024/06/30/business/chicken-soup-for-soul-bankruptcy.html
[2] Markets Insider. (2024, June 30). Paramount Global stock price, news, and financial information. Markets Insider. https://markets.insider.com/stocks/PARA/paramount-global-inc
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