The stock is down 3.9% in initial after-hours trading. The maker of the Redbox DVD rental kiosks says that CEO Paul Davis — who has held the top job since 2009 — will retire in March, and be replaced by CFO J. Scott Di Valerio. The change comes as the company, in a joint venture with Verizon, begins to roll out a streaming service called Redbox Instant that aims to compete with Netflix and Amazon. The announcement about Davis’ departure also notes that Coinstar expects to hit its full-year and Q4 forecasts for revenue and cash flow growth with earnings from continuing operations at the high end of a range it provided. But that’s “primarily due to lower company G&A expenses and certain tax benefits at Redbox” — not necessarily strong results from the core business. Here’s the release:
The stock price is up more than 8% at midday after the New York Post said that the owner of the Redbox DVD rental kiosks is talking about selling itself to “an undisclosed private-equity firm.” Coinstar has a market …
Coinstar CEO Paul Davis — whose company owns the Redbox DVD rental kiosks — appeared on CNBC today to discuss a venture that’s almost as important to folks in the media business: coffee. Coinstar shares were up 6% after Coinstar said that by year end it will roll out 500 …
There was an underlying message in Redbox parent Coinstar’s presentation to analysts yesterday following its 3Q earnings report: Warner Bros, Universal, and Fox had better not double the delay period for providing DVDs to Redbox. Despite his easy-going speaking style, CEO Paul Davis firmly indicated that such a strategy — increasing the window for those studios to as much as 60 days from the current 28 – would lead to corporate warfare and probably backfire. It would help Paramount, Sony, and Lionsgate, which recently extended their agreements to supply DVDs to Redbox the same day that they’re available elsewhere. (Disney also provides discs on opening day to Redbox.) What’s more, Redbox execs say that they can buy DVDs from other sources instead of securing them directly from the studios. “The great thing about the United States is that the first-sale doctrine gives you opportunity for workarounds, and we evaluate that … to protect the windows we enjoy today,” Davis says.
Coinstar executives say that they want a win-win solution — that studios have something to gain by helping Redbox. The company illustrated that with its new agreement to give Paramount 100,000 Coinstar shares for extending its day-and-date deal, with an option for 100,000 more if the studio takes it two years beyond 2014. They also subtly reminded studios that they’ll need Redbox if they decide to milk DVDs as long as they can while waiting for consumers to warm to cable and Internet VOD services. Coinstar noted that it recently became the leading renter of DVDs in the wake of Netflix’s blundering decision to raise subscription prices by 60% for people who want to to rent discs as well as digital streams.
UPDATE, 3 PM: CEO Paul Davis says the Redbox price increase to $1.20 a night followed “several months of testing” and was designed to keep prices “as low as possible for consumers” as operating costs rise. The company says that the “vast majority” of transactions at its kiosks involve debit cards affected by the Durbin Amendment, as opposed to credit cards. Customers will still be able to rent for $1 a night through November if they reserve a DVD online and then pick it up at a kiosk. He added that the company plans to unveil a digital streaming plan by year’s end, calling it “a top priority for the company.” Davis says Redbox has seen business increase from consumers who felt “disenfranchised” by Netflix’s 60% price hike for its combo DVD rental and streaming service, but he can’t say how many people defected.
On the studio side, Davis says Paramount just extended its agreement to provide DVDs to Redbox the same day they’re available in stores through 2014. The studio will receive 100,000 shares of restricted stock in Coinstar, and can collect an additional 100,000 shares if it exercises its two options that each would extend the agreement by a year. Redbox’s day-and-date agreement with Sony runs through September 2012, and one with Lionsgate goes through August 2014. It has similar deals with Summit and Anchor Bay.