Netflix victim Quickflix has restructured a content deal with a major studio

Kevin Spacey as Frank Underwood in House of Cards. Supplied

Quickflix has negotiated with content suppliers to forgive some of the money owed for programming as it tries to restructure in the face of Netflix’s entry into the Australian market.

CEO Stephen Langsford says he has finalised an agreement with a major, unnamed studio for the release of about $2 million in debt.

The company also has in-principle agreement with three other major studio licensors for the restructuring and release of a further $4 million.

On the latest numbers, Quickflix has been losing 5000 paying customers a month since the US streaming giant Netflix entered the Australian market in late March.

Netflix has taken just six months to reach more than 10% of Australian homes, or near 1 million subscribers.

Its competing against local players including Stan, a Fairfax Media and Nine joint venture, and Foxtel and Seven West Media’s Presto.

Quickflix, which has has an extensive DVD library, is in a trading halt as it looks for new funding, more revenue generating opportunities and a way out of its heavy minimum guarantee payment obligations from content licensing deals it did several years ago.

The company says it is in discussions with a number of investors regarding potential additional funding to assist with the recapitalisation process.

Cost savings of $4 million a year have been identified.

Staff numbers will be cut by 20%, $1.7 million a year saving. Other cuts across call centre support, corporate overhead, technology development and infrastructure, content management and marketing of will mean a saving of $2.3 million a year.

The company was due to announce its annual results in August, but delayed this as it tries to restructure. Losses more than doubled to $8.592 million for the half year to the end of December.

Two deals Quickflix had been negotiating recently fell through.

One was with Foxtel’s Presto, which would have seen Quickflix get rid of its content licensing overheads.

The second was an acquisition of a media player in China. This would have given Quickflix an entry into the creation and distribution of Chinese language content.

Locally-owned video streaming business EzyFlix was the first victim of Netflix’s Australian launch and shut in August.

* Disclosure: Business Insider is published by Allure Media, which is 100% owned by Fairfax Media.

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