The up-front cost is just $19.5 million, but the ultimate valuation will likely grow over time, as future licensing proceeds will also be split with Sonar. The initial payment is considered an advance, which will be recouped by Chicken Soup upon the sale or licensing of certain TV rights. About $1 billion has been invested into film and TV projects controlled by Sonar, according to the official deal announcement. Among the company’s current series are Hunters on Amazon Prime Video and the soon-to-premiere Mysterious Benedict Society on Disney+.
Screen Media, a division of CSSE, will distribute Sonar’s library of more than 1,000 titles. Those offerings include Hal Roach Studios shorts like Little Rascals, Laurel & Hardy and Blondie and miniseries like Lonesome Dove and Dinotopia.
The acquisition covers 372 TV series and more than 700 Films. Sonar’s library titles have received 105 Emmy Awards from 446 nominations, and won 15 Golden Globes. The movies in the stable include several that originally premiered on Hallmark, Lifetime and Showtime cable channels. They have been licensed to more than 300 buyers in 125 global territories worldwide in addition to the U.S. and Canada.
“Chicken Soup for the Soul Entertainment and Screen Media are the perfect partners for maximizing this library’s potential far into the future,” Sonar CEO David Ellender said in a press release. “So much of this catalog is a perfect fit for the current and emerging AVOD-driven markets in the U.S. and abroad.”
Earlier this year Chicken Soup took over Crackle, the AVOD service in which original owner Sony Pictures Entertainment remains an investor, expanding a deal first reached in 2019. The company also operates a number of other streaming services and execs indicated the Sonar deal points to an opportunity for a new AVOD service to be launched. Sonar will have a 5% interest in that service, per the agreement.
The deal marks the latest chapter in the long, complex history of the TV studio founded by the late, iconic longform producer Robert Halmi Sr. in 1979 as Robert Halmi Inc.
It went through a string of different incarnations — Qintex Entertainment, Hallmark Entertainment, RHI Entertainment and Sonar Entertainment — as it changed owners multiple times. It had a stint as a publicly traded company. At one point, the company was the top producer of TV movies and miniseries at the height of the genre’s popularity in the 1980s and 1990s, with shows like Gulliver’s Travels and Merlin. But it also went through multiple bankruptcies.
The latest iteration, Sonar Entertainment, pushed into TV series production with such shows as The Shannara Chronicles (MTV/Netflix), Taboo (BBC/FX), The Son (AMC), Mr. Mercedes (DirecTV), Das Boot (Sky Europe), Hunters (Amazon Prime Video), and Mysterious Benedict Society (Disney+).
But as recently as 2019, the company experienced a cash-flow crunch, and a number of executives left at the time. Ellender and a number of other Sonar employees are expected to join Chicken Soup for the Soul after the close of the deal, which is expected within 30 days.
In a conference call with analysts, Chicken Soup for the Soul Entertainment CEO Bill Rouhana projected the deal will net the company $50 million over the next three years. Gross revenue will be double that amount.
In terms of the existing Sonar titles on various streaming services and networks, Rouhana said termination clauses will enable most of them to be redirected to CSSE.
“The content is coming home,” Rouhana said, “and it will be coming quickly.”
An exception to that will be bigger-budget series made with streaming giants like Amazon, Netflix or Disney. “They’re going to get the vast majority of the early days of that stuff,” he said. But taking control of those properties, even without gaining exclusive streaming rights, will be lucrative, he added.
About 26 projects are currently in development at Sonar, the exec said, with a couple of those in active production.
“We will pick and choose among the new, current TV series those which one we can finance with international partners and therefore keep all of. Those that we can sell and make a substantial profit on, we’ll sell,” Rouhana said. “Strategically, this gives us access to a whole new set of relationships and opportunities.”
Investors typically sell shares in the acquiring company in an M&A transaction, but Chicken Soup for the Soul Entertainment stock gained more than 10% on twice its normal trading volume. It closed at $32.57, just 38 cents shy of its all-time high, and has risen 61% in 2021 to date.