US-based Karma Media Holdings has taken control of troubled local Australian streaming media company Quickflix.
Voluntary administrators Jason Tracy and Richard Hughes of Deloitte announced that Karma has bought Quickflix and its assets in exchange for payment of $1.3 million.
Tech and media entrepreneur Erik Pence will lead Quickflix as the managing director. Karma will also make available $700,000 to develop Quickflix.
“(And) Karma is likely to invest additional operational funds after the initial transition period for use in building public awareness programs and planned shift in content strategy towards niche markets,” Karma said.
Quickflix was established in 2003, listed on the ASX in 2005 and went into administration in May this year. Its head office is in Perth, and it operates a distribution centre in Auburn in Sydney
Unsecured creditors will receive as much as 21.5 cents in the dollar, the majority of employees will be retained by the new owner and employees not retained will receive outstanding entitlements in full.
The latest deal means that Quickflix will continue to trade and won’t, at least for the moment, be closed like competitor Presto.
“Quickflix has encountered corporate challenges and impediments in a highly competitive environment. As Administrators we have been able to continue trading the business since our appointment, reduce costs, retain value, keep employing the majority of staff, and conduct a global sale process,” says Joint Voluntary Administrator Jason Tracy.
“The result is a good outcome for stakeholders. Under new control, the Quickflix business will continue to trade, 24 employees will be retained, departing or already departed employees will receive all relevant entitlements, creditors will get a return and suppliers will have the option of trading with the continuing business.”
The company founded in 2003 by Stephen Langsford in his garage in Perth was originally, like the US-based Netflix, an online DVD rental service where customers paid a flat fee to have an unlimited number of DVDs delivered to their door.
Quickflix’s downfall accelerated with the direct entry into Australia of Netflix. By the middle of last year, after the launch of Netflix, Stan and Presto, the company was losing 5000 subscribers a month and bleeding cash.