Subscription video on demand service Quickflix has appointed business consultancy Ferrier Hodgson as voluntary administrator as the company buckles under increasing pressure in the SVOD market.
In a statement to the Australian Securities Exchange (ASX), Quickflix founder and CEO Stephen Langsford said the restructure and cost-cutting measures implemented had failed to save the company.
“Despite Quickflix being first to the streaming market and holding a leadership position in 2014, ongoing growth has required capital for continued investment in content and marketing,” he said.
Langsford highlighted Nine and Fairfax Media’s joint SVOD venture Stan – a competitor of Quickflix – as being an obstacle it’s unable to overcome due to the redeemable preference shares (RPS) held by Nine. The RPS were initially with content creator HBO. In July 2014 Nine bought out those shares from HBO for an undisclosed sum.
“Neither Nine Entertainment nor Stan have ever participated in any capital raisings to assist Quickflix’s growth and its ability to raise capital from any source has been constrained by the RPS,” said Langsford.
Stan has said it would only restructure the RPS for Quickflix if Quickflix paid Stan $4 million, or $1.25 million and transfer all of the existing Quickflix customers over to Stan.
“Neither alternative presents a viable option for Quickflix,” said Langsford. “In the first instance Quickflix does not have the funds to make payments to Stan, nor does the company believe it can raise funds from investors for that purpose.
“Neither alternative leaves Quickflix in a position to fund its unsecured creditors nor with capital necessary to take the business forward.
“As these negotiations with Stan have not been successful and the majority of potential new funders have specified the restructure of the RPS as a condition of providing capital, the company has no other realistic alternative but to appoint voluntary administrators.”
Customers shouldn’t be affected by the administrators, assured Langsford, and stressed it’s not a voluntary administration.