LOUISVILLE, CO -- Since the official announcement of Coinstar's sale of its entertainment and vending division to National Entertainment Network last month, there has been no lack of speculation regarding the newly formed company's plans for the nationwide operation. One widespread rumor held that the Louisville, CO-based firm ultimately intended to break up and sell the nationwide operation's many routes.
The speculation and rumors have largely been put to rest with NEN's apparent intention to keep what is the largest single provider of bulk vending, kiddie ride, skill crane and videogame services intact throughout North America.
In a letter to the management of the company's locations dated Oct. 3, NEN president and chief executive Kevin J. Wall said that the company will continue to function without interruption and with the "... same great nationwide team who serviced your locations prior to the acquisition."
Wall also indicated that since Louisville, CO-based NEN would be dedicating its efforts solely to the bulk, crane, kiddie and video categories, organizational improvements may be in the works. "Given that NEN's total focus is on entertainment vending, this exciting development should both grow and transform your business," he said.
This move, according to industry observers, would represent a dramatic change from Coinstar's strategy, which boasted a wide-ranging portfolio of equipment types. According to Wall's letter, NEN's focus on entertainment equipment will offer "bottom-line benefits" to locations as the company moves forward.
"Previously, as part of Coinstar, resources allocated to entertainment vending competed with the [self-service] coin-counting and Redbox [automated DVD rental] platforms," he told location management. "Now, you can look forward to a dynamic range of first-tier products and platforms, all designed to increase your entertainment commission income."
Separately, NEN has named Dave Schwartz, formerly of Coinstar Entertainment Services, vice-president of sales and marketing.
"NEN is the largest and only national operator of entertainment vending," Schwartz told VT. "And we have distribution at the nation's leading mass merchants, supermarket chains and family-style restaurants. It is our intention to continue maximizing the distribution and leveraging this organization going forward. We are committed to running this business."
A privately held company, NEN was formed in August 2009 in anticipation of the purchase of Coinstar's entertainment services division. The NEN team is managed by three principals: Wall, who was most recently with National Vending (Des Moines, IA); Bill Lewis, a retired Department of Defense logistics administrator and entrepreneur; and Rich Gerhardt, who is the company's general counsel.
According to documents filed with the Securities and Exchange Commission, Coinstar received "nominal consideration" for the business with the expectation to record a pretax loss of $52 million to $57 million. However, that loss is expected to be offset by a one-time tax benefit estimated to be between $82 million to $87 million.
Bellevue, WA-based Coinstar is best known for its original self-service coin-counting and self-service DVD rental machines. It also provides e-payment and prepaid products, along with money transfer services. Its automated equipment and services are placed in more than 90,000 locations.