Redbox chief steps down to pursue 'entrepreneurial' interests
Mitch Lowe, a former Netflix senior executive, will remain as Redbox president until Coinstar finds a replacement.
Seattle Times business reporter
Bellevue-based Coinstar said Thursday that the president of its fast-growing Redbox movie-rental business is leaving to "pursue entrepreneurial and other interests."
Mitch Lowe, a former Netflix senior executive who joined Redbox in 2003 when it was a fledgling McDonald's venture, will remain as president until Coinstar finds a replacement, the company said in a statement.
Also Thursday, Coinstar released preliminary results for the three months ended June 30. It said revenue for the second quarter likely will come in between $434 million and $436 million, well below Wall Street's estimate of $446 million. Official results are due next Thursday.
After the announcements, shares of Coinstar fell $5.39, or 9.2 percent, to $53.24 in after-hours trading.
Coinstar began investing in Redbox six years ago and took full ownership in 2009. Redbox, whose corporate offices are in Oakbrook Terrace, Ill., rents movie DVDs for a dollar a day at more than 31,800 vending machines in supermarkets, drugstores and other places shoppers regularly visit. It is Coinstar's biggest source of revenue, accounting for 85 percent of the $424.1 million the Bellevue company took in during the first quarter.
Still, Redbox has had setbacks.
Holiday sales were surprisingly low, partly because of Redbox's delayed access to new Hollywood releases.
As a result, Coinstar reported a preliminary fourth-quarter profit that substantially missed projections.
Redbox has said for more than a year that it plans to introduce a new online video-streaming service, but it has yet to disclose more than a broad outline.
Lowe told analysts in February that Redbox would bundle physical disc rentals with an unlimited streaming offer.
He said it was talking with potential partners and would provide full details this year.
"What we're looking for is a partner that, yes, has customers, but also more importantly has a lot of quality entertainment rights," Lowe said at the time.
Lowe's departure comes amid fierce competition in the home-entertainment market.
Amazon.com, which is building out a video-streaming service as part of its $79-a-year Prime shipping program, will soon offer older CBS-owned television shows, including "Frasier," "Cheers" and "Star Trek."
The move, announced Wednesday, was said to represent Amazon's most significant licensing agreement since the introduction of its Prime video-streaming service in February.
In a statement, Coinstar Chief Executive Paul Davis thanked Lowe for "establishing Redbox as a leader in the home entertainment business."
"A true entrepreneur, we wish him the best as he pursues other passions," Davis said.
Lowe said he'll work to ensure "a smooth transition in the days ahead."
"As the market continues to evolve, I look forward to watching Redbox innovate and grow with it," Lowe said in the statement.
Coinstar did not give details of Lowe's employment conditions, such as whether he has a noncompete agreement.
Separately, Coinstar said its board of directors gave the go-ahead to buy back $250 million of stock on top of another share repurchase program.
Between January 2010 and the end of last month, Coinstar bought back about 2.4 million shares for $112.6 million.
Amy Martinez: 206-464-2923 or email@example.com
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