Riding out the storm of sudden executive exits, rapid cash flow burn and a trading halt, Australian IPTV aspirant Quickflix now hopes it is weeks away from securing a new strategic investor.
Quickflix founder and recently re-appointed CEO Stephen Langsford confirmed at the company's AGM last Friday that the company had engaged the services of US based digital media financing and M&A crew, MESA, to assist in the hunt for a new and cashed-up partner.
MESA is known as a specialist in forging alliances between technology and entertainment players and has completed 55 transactions since 2004. The group was behind the sale of streaming service MOG - which Telstra has rolled out in Australia - to Beats Electronics, the headphone and speaker company founded by rapper Dr. Dre and Interscope-Geffen-A&M chairman Jimmy Iovine.
Sources suggest that Quickflix’s new benefactor will most likely be of US origin and will be one with an eye to buying out the entire company. However Langsford would not comment on the potential of an acquisition play. The company maintains that it remains in discussions with Australian and international investors regarding possible investment and stated that “expects to be in a position to provide a further update in regards to its funding arrangements within the next week.”
Langsford, an avid mountain climber, returned from a recent ascent to discover that CEO Chris Taylor and deputy chairman Justin Milne were exiting the company. Langsford told the Register that his high altitude travels primed him well for the events of the last couple of weeks, and that he was optimistic about finding the right strategic investor in due course.
The executive exits followed the resignation of 15.7% stakeholder HBO representative Henry McGee from the board and with that speculations that HBO was withdrawing support but Langsford stressed that “HBO are very committed to the company.” Langsford said that the “hard decisions of restructuring were now in place and the company is now on track to getting costs in check.”
After conceding that operating costs have galloped ahead of revenues, the company has embarked on a restructuring programme which will see the shedding of one third of staff, which will eliminate over 30 staff. The headcount reduction should shave $AUD2m off annual costs.
The overall restructuring initiatives aim to curb spending by around $1m per month. As part of the plan, the company has also shed its high spend marketing strategy, ceasing all brand and traditional advertising. Quickflix started the year with its first significant consumer marketing foray rolling out its first national advertising campaign with Belgiovane Williams Mackay (BWM), a favourite of Milne’s and hiring Ruby Rose for a short lived stint as erstwhile brand ambassador.
The cost savings have begun to have effect and will reach their full effect within three to six months.
The AGM also approved the appointment of West Australian based specialist lawyer David Sanders to the Board of Directors. Quickflix expects to resume trading on the ASX from Monday. ®