Quickflix Limited (ASX:QFX) founder Stephen Langsford believes that the company will emerge stronger from voluntary administration. The company called in administrators on Tuesday following months of trying to renegotiate Redeemable Preference Shares currently held by competitor Stan Entertainment. During the administration process, it is business as usual for subscribers with no expected interruptions to service.
- Quickflix founder confident company will emerge stronger from voluntary administration
- Nine Entertainment’s interest acted to stifle business development
- Business is cashflow positive and continues to seek and attract subscribers
- All gift cards and subscriptions continue to be honoured.
The founder of Australian video streaming pioneer, Quickflix Limited (Administrators Appointed) is confident that the Voluntary Administration process will see the company emerge in a stronger position. On Tuesday, the Directors appointed partners from Ferrier Hodgson as voluntary administrators following months of frustrating negotiations with Nine Entertainment subsidiary, Stan Entertainment Pty Ltd, regarding the restructure of Redeemable Preference Shares (RPS).
Quickflix founder, Stephen Langsford said Nine Entertainment had acquired the RPS from HBO, which had previously acted in a beneficial arrangement with Quickflix.
“We issued the RPS to global content provider and commercial partner HBO in 2011 in a friendly arrangement that provided Quickflix with access to capital and HBO access to an Australian platform,” he said.
“Issues arose in 2014 when Nine Entertainment acquired the RPS from HBO for an undisclosed sum, which we believe was a fraction of the face value. Whilst Nine indicated that they were treating the acquisition as a financial investment, their actions — and inaction — since the acquisition tend to indicate otherwise.
“We had discussions regarding restructuring the RPS in a way that would allow us to raise new capital and grow the business, but it became clear that Stan had a different agenda, and was primarily driven by the goal of gaining our member base and removing us as a competitor.”
Mr Langsford said the company he founded in 2003 had spent the past year working to revise its business model in the face of increased competition from other streaming video on demand (SVOD) providers. This has included negotiating significant reductions in licencing fees with content providers as well as changes to the marketing budget and staffing.
The result was that for the first time, Quickflix was cashflow positive in the March quarter.
Despite competition, Mr Langsford believes customers are attracted to Quickflix because of its diverse range of titles as well as its ability to offer blockbuster premium content, including Star Wars Episode 7, the most streamed movie in the company’s history. Furthermore, Quickflix is the only online DVD rental service operating in Australia.
Mr Langsford said he was pleased the Administrators were focussed on maintaining the existing business, with new content and marketing plans being developed in conjunction with existing staff.
To this end, Mr Langsford noted that more than 2,200 new subscribers had been added in the past week alone.
He was also pleased that the Administrators had agreed to honour all existing valid gift cards issued by Quickflix.
Quickflix management are planning on submitting a Deed of Company Arrangement (DOCA) to the Administrators that will allow the balance sheet to be restructured, new capital to be raised and will reposition the company as a broader based digital consumer, ecommerce and entertainment player.