Outerwall Inc. -- Moody's says Outerwall Inc.'s increased dividend is credit negative but will not impact the Ba3 CFR; Outlook remains negative

New York, March 15, 2016 -- Moody's Investors Service said that Outerwall Inc.'s ("Outerwall") recent announcement to double its quarterly dividends from $0.30 per share to $0.60 per share is a credit negative development but will not impact its Ba3 Corporate Family rating (CFR) and the rating outlook remains negative. The company also announced that it plans to explore strategic and financial alternatives to enhance shareholder value, while continuing to focus on streamlining its operations and using cash flows to execute shareholder payouts and debt retirement. The announcement comes at a time when Outerwall's largest business segment, Redbox, is facing challenging business conditions due to accelerated secular pressure in the physical DVD rental business. Engaged Capital LLC, which owns 14.6% of the company's outstanding shares, has been pressurizing management to take actions to boost shareholder returns, including increasing dividends and / or a possible sale of the company. On February 19, 2016, Moody's downgraded Outerwall's CFR from Ba2 to Ba3 and changed the rating outlook to negative from stable following the company's weak earnings announcement (for Q4-2015) and bleak outlook for its Redbox business.

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