Chicken Soup for the Soul Entertainment signs US$4.35mln deal to acquire Pivotshare

Chicken Soup for the Soul Entertainment Inc (NASDAQ:CSSE), a provider of television and online video programming, has inked a deal to acquire Pivotshare Inc, a subscription-based, video-on-demand service in a cash-and-stock deal worth US$4.35mln.

Pivotshare, which generates about US$2.5mln in yearly revenue and boasts about 25,000 paid subscriptions, will pave the way for Chicken Soup for the Soul to gain traction in the competitive video-on-demand market.

“This accretive acquisition of Pivotshare launches us into the subscription [video on demand] space, significantly accelerating our business plan,” said Chicken Soup CEO William Rouhana in a statement.

“This multi-channel online network comes with pre-existing content, much of which fits with the Chicken Soup for the Soul brand,” he added.

Chicken Soup for the Soul will use mostly preferred stock to complete the acquisition. About US$3.5mln of the US$4.35mln purchase price, excluding closing costs, will be funded with Chicken Soup shares. The balance of the price will be funded by US$257,000 in cash and 74,235 shares of CSS Entertainment common stock.

Earnings in focus

News of the acquisition came as Chicken Soup for the Soul posted a net loss of US$1.4mln on revenue of US$3.1mln for its second quarter.

The jump in its revenue from US$793,000 in the year-ago quarter was driven by its acquisition of Screen Media back in 2017 as well as the growth of its online networks, which include A Plus and Popcornflix.

For the full 2018 year, the company expects to report revenue of about US$36mln, excluding the acquisition of Pivotshare, which will not yet have a material effect.

As of the end of June, Chicken Soup for the Soul was sitting on cash and cash equivalents of US$18.2mln and outstanding debt of US$7.1mln.

Among the company’s production advances in the quarter was the launch of the production of a new series, The Fixer, which is aimed at helping millennials overcome their financial struggles.

Contact Ellen Kelleher at [email protected]

Story by ProactiveInvestors