Quickflix looks set to become the first high-profile casualty of the tussle between Australia’s streaming services after entering voluntary administration.
The company, which claims to be Australia’s first movie and television streaming service, has appointed Ferrier Hodgson as voluntary administrator after failing to raise capital to pay for new content and marketing.
And rather than blame US giant Netflix, Perth-based Quickflix has called out local competitor Stan for blocking its fundraising efforts.
Quickflix said on Tuesday it can’t afford the price set by Stan to restructure the $11.7 million worth of redeemable preference shares held by the Nine Entertainment-Fairfax joint venture – a prerequisite for any interested investors.
Stan, which acquired the shares in Quickflix from HBO in 2014 for an undisclosed sum, wants either $4 million in cash or $1.25 million plus all of Quickflix’s streaming customers.
Founder and chief executive Stephen Langsford said “neither proposal presents a viable option” for his company, which recently announced plans to cut 15 per cent cut of its workforce in a bid to save $1 million annually.
The shares were first granted to HBO in 2012 when the US TV network took a 15.7 per cent stake in Quickflix and licensed its content.
“As these negotiations with Stan have not been successful and the majority of the 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,” Quickflix said.
Watching TV and movies over the internet has become increasingly popular among Australians, with Netflix attracting a big customer base due to its vast and exclusive content.
The local streaming market is also crowded, with local providers including Stan and Presto, a joint venture between pay-TV group Foxtel and Seven West Media.
The redeemable preference shares held by Stan rank ahead of ordinary Quickflix shares when it comes to dividends and capital returns, and is recorded as debt on the company’s balance sheet.
While Stan can only ask for redemption of the RPS in limited circumstances, Quickflix said it can’t fund redemption and the existence of RPS is a “significant disincentive for new investors.”
“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,” Mr Langsford said.
“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.”
The administrators plan to operate the company’s Australian business as usual.
Quickflix’s New Zealand unit operates through its local subsidiary, which continues to trade and isn’t in voluntary administration.
Quickflix shares last traded at 0.1 cents on the Australian bourse, valuing the company at $2.22 million.