Quickflix goes into administration, blames rival firm


news Australian streamed content provider Quickflix has announced that it has gone into administration, claiming that Nine Entertainment Co and Fairfax Media Limited are to blame for its problems.

In a statement, Quickflix founder and CEO Stephen Langsford said that a block to raising new capital has been the existence of redeemable preference shares held by Stan Entertainment (Stan), a firm owned by Nine Entertainment Co and Fairfax Media Limited.

Langsford explained that the shares were issued to HBO in March 2011 at a cost of $10 million when Quickflix entered a commercial relationship with HBO. In July 2014, Nine Entertainment Co acquired the RPS from HBO for an “undisclosed amount”, he added – though Business Insider reports that amount as $1 million.

“The RPS ranks ahead of ordinary shareholders with respect to dividends and capital returns and whilst from a legal perspective it constitutes equity, accounting standards have required it to be recorded as current debt on the Company’s balance sheet,” said Langsford.

The face value of the RPS is presently $11,730,549, according to the CEO.

“Whilst Stan can only ask for redemption of the RPS in limited circumstances, as previously advised the Company is not in a position to fund redemption and the existence of the RPS held by Stan is a significant disincentive for new investors,” Langsford said.

Although Quickflix was first to the streaming market and held a leadership position in 2014, ongoing growth required capital for investment in content and marketing.

“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 shares,” Langsford claimed.

In response, he said, Quickflix restructured its business, including managing to release the firm from over $7.5 million in obligations with content providers, and making cost-savings across operating and investment areas valued at over $5 million a year.

Quickflix also achieved positive earnings before interest and tax for the first quarter of this year, according to the firm.

However, since addressing the RPS was key to securing new investor interest, Quickflix had sought to negotiate with Stan to “restructure the RPS over an extended period”, said Langsford.

Stan’s reply was that it would only consider restructuring the RPS if Quickflix paid Stan $4 million in cash, or if Quickflix paid Stan $1.25 million in cash, transferred all of its streaming customers to Stan (which Stan apparently valued at $250,000) and signed an agreement to not compete with Stan.

“Neither alternative presents a viable option for Quickflix,” said the CEO, who added that Quickflix does not have the funds to make payments to Stan and does not 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,” he said.

“[T]he Company has no other realistic alternative but to appoint voluntary administrators,” Langsford said

To manage the process going forward, the firm has appointed partners from Ferrier Hodgson as voluntary administrators, who intend to operate the Quickflix Australian business as usual for the time being.

“The management of Quickflix remain dedicated to achieving a successful restructure of Quickflix through a Deed of Company Arrangement that will reposition the listed group to a broader-based digital consumer, ecommerce and entertainment player leveraging its existing marketing database, data and platform whilst also pursuing M&A opportunities,” the statement concluded.

Quickflix’s New Zealand business continues to trade as normal and is not in voluntary administration.

Image credit: Quickflix


  1. Quickflix wants to compete with the big boys, complains when the big boys act like the big boys….. Righto.

  2. There’s a great saying by Computer Business Legend Jack Tramiel*; “Business is War”.

    *Founder of Commodore Business Machines

  3. Not sure whether they’ll survive, which is a shame. We maintained a DVD service with them until recently as it was a convenient way to get older TV series or movies that the local streaming services don’t carry (ignoring VPN access to US services or torrents). Quickflix’s disc catalogue was extensive and we had considered retaining it, however Auspost’s recent changes to its letter mailing service rendered the disc service unattractive as the turnaround time blew out considerably. Judging from the Quickflix exit survey we completed a few weeks ago this has caused a substantial loss of customers from that service and they’re scrambling to work out a viable alternative model.

    I wonder if there is a niche they could occupy as a provider of older material, current local offerings from the major players are spotty at best if you want something more than a few years old, let alone recent stuff. Not a glamorous position for a public company, probably more pay the bills and have a pleasant EOY party.

    • If it had that much of an impact surely they’d be blaming Auspost instead of Fairfax etc.

      I had to laugh when we got the notification of Ausposts changes. They already complained about email making them obsolete over the last 10 years and so their solution is to make their service less attractive than couriers. Genius.

  4. Sometimes voluntary administration is a snide method to offload debt obligations. It works like this;
    “The company is going bankrupt. Here, take 3c in the dollar, or get nothing in the wind up”, or
    “Our long term contractual obligations to you are going to cause the company to fail, and you will receive nothing. Release us from the contract or we fold the company”

  5. We’ve been using Quickflix for a few years now. The postal slowdown has been very noticeable. From a few days to weeks now. Only 150km from the GPO and we use a PO box! Auspost is so useless it’d be better to wind it up.

  6. I don’t understand why they took $11M from Stan, a competitor, in a weird form and then are now complaining about it.

  7. Just talked to my boss.

    Basically, what it means, is that they traded $10M or so dollars worth of equity, into RPS. Normally that’s done because the RPS doesn’t have any voting rights. Basically, it’s like being a worse version of having equity. The RPS will have rules about converting into equity. It’s treated as debt, because it’s basically one step up from debt, and it all depends on the terms of the RPS.

    If Quickflix was now worth more than it was in the past, then it wouldn’t be a barrier. They would convert the RPS into actual shares, it wouldn’t have a huge stake in the business, and everyone would be happy.

    What’s likely (based on the fact that HBO sold them for $1M) is that the company has been losing money, rather than making money. The $11M value of the RPS, if converted into actual shares, might dilute the existing equity holders out of having any say in the company.

    So there’s $11M of debt. If there’s little opportunity of the company turning around (which is likely, because if you’ve blown $11M of “value” from HBO) then it’s going to be hard to attract investors. That’s the underlying problem, financially, their competitor has bought their $11M debt, it’s just in a different form. And they’ve run out of borrowed money, and are asking for more to continue the business.

    It’s not like there’s a healthy business underneath it all. If they’d given HBO $11M as equity, it would be a different story. It was their decision to borrow the money / issue the RPS.

  8. Like all the older TV series that can’t be seen on other providers…..they should stream everything and take away the premium extra they charge for every episode of anything decent. …Have also a competitive monthly fee….there are only so many available viewing hours in a day and only the lazy retired, disabled, and lazy unemployed, would watch more.
    Postage times is ridiculous and expensive for Quickflix, so price and content restructure must happen……they have so many good shows, that will be lost….so they must get competitive and bite the bullet of being financially greedy.

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