Outerwall Inc., the parent of DVD kiosk operator Redbox, said it will explore "strategic and financial alternatives" and doubled its quarterly dividend to 60 cents a share from 30 cents.

Shares of Outerwall, which also runs the Coinstar and ecoATM brands, rose 14% in after-hours trading to $39.15.

Last month, activist investment firm Engaged Capital LLC disclosed a stake in Outerwall and urged the company to cease virtually all investment and share repurchases, issue a $125 million dividend to investors and begin a sale process. Engaged Capital criticized the company for "persistent failures."

In response, Outerwall said it was "unfortunate" that Engaged initially shared its views publicly without first discussing them with Outerwall. The company said it would carefully review the firm's recommendations.

On Feb. 4, Redbox reported a 24% plunge in fourth-quarter movie rentals, signaling that even budget-conscious consumers are abandoning Hollywood's once-lucrative DVD business.

The company attributed the drop to "an accelerated decline in the physical market," as well as fewer titles available to rent and lower demand after a price increase.

In December, former Warner Bros. executive Mark Horak left his post as Redbox president after less than two years on the job, during which he unsuccessfully tried to transition the company to a digital strategy. Outerwall Chief Executive Erik Prusch was named interim president of Redbox.

Write to Josh Beckerman at josh.beckerman@wsj.com

 

(END) Dow Jones Newswires

March 14, 2016 17:15 ET (21:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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