On Crackle Deal, Shares of Chicken Soup for the Soul Entertainment Jump 36%

Is it chicken soup for the AVOD soul that will create a category leader?Chicken Soup for the Soul Entertainment, a relatively small entertainment and media company, is hoping to vault into one of the industry’s top ad-supported video-on-demand players through its deal to take control of Sony’s Crackle — the latest in its roll-up strategy.As first reported by Variety, Sony Pictures Television reached a deal with CSS Entertainment to form a joint venture under which the latter will have majority ownership of Crackle (to be renamed Crackle Plus). CSS Entertainment expects the Crackle deal to close next month, or in May 2019 at the latest.Investors are bullish on CSS Entertainment’s latest move: On Friday, the company’s stock, which is traded on Nasdaq, by 36.4%, to close at $12.36 per share. “We now are in a position to create one of the few meaningful companies that will be in [the ad-supported VOD] space,” Bill Rouhana, CSS Entertainment chairman and CEO, said on a call with investors Friday.CSS Entertainment expects the addition of Crackle to more than double overall revenue (it generated $27.8 million in 2018 sales) and will be a “meaningful” driver to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). The Crackle contribution to EBITDA will be around 25% of total revenue, execs said.