Redbox Business Hurt by 28-Day Delay of DVDs

Its parent company's stock fell 27% Friday after CEO Paul Davis said 'we underestimated the impact that the delay would have.'

NEW YORK – The 28-day delay that several studios have established for getting DVD releases to DVD rental kiosk operator Redbox seems to be a drag on the company’s business.

Shares of Coinstar, which operates Redbox, fell more than 20 percent in early Friday trading after the company on Thursday slashed its financial outlook for the fourth quarter and current year, citing weaker-than-expected holiday demand and the new release window.

The stock on Friday fell 27.1 percent to $41.50.

Coinstar said it had expected a stronger performance from movies released during the holiday season.

"Overall, the performance of the Redbox business during the fourth quarter was not in line with our forecast," said CEO Paul Davis. "This was Redbox's first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter.”

The company said it now expects revenue of $391 million, lower than its previous guidance of $415 million-$440 million, and lower earnings per share from continuing operations. Redbox revenue still grew 38 percent over the year-ago period in the fourth quarter.