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US raiders try to replace Quickflix board Featured

Listed Australian video streaming company Quickflix is under attack from a minor US shareholder, which wants to replace its entire board.

At 7:30 last night ASX-listed Quickflix issue an announcement that one of its minority shareholders, a US investment company called Guaranty Finance Investors, had requested that an extraordinary general meeting be called to consider a resolution to replace the existing board with four of its own nominees.

Quickflix CEO Stephen Langsford describes the move as ‘try on'. “A small group of opportunists, largely represented by Don Campbell in the US, are seeking to unseat the board and replace it with US nominees, none of whom are shareholders,” he told iTWire. “This is occurring when Quickflix has just recorded a quarter of strong growth.”

But what is this ‘try on’, and why now? As Langsford says, Perth based Quickflix increased its base of paying customers by 16,000 to 118,557 last quarter as streaming becomes more popular in Australia. It has worked hard in the last year to increase its range of content and the number of devices it can stream to, and it has reversed a disastrous profit slide that gave it a near death experience in 2012.

But the company’s rock bottom share price has yet to recover. It is below 1 cent, after hitting a peak of 13 cents in early 2012, giving it a market capitalisation of just $9 million. US cable and streaming company HBO is the largest shareholder, with 14% equity.

The company is no stranger to corporate shenanigans. Last year it flirted with a major investment from investment group Gleneagle Securities, which fell through and became rather ugly. It has since raised another $5 million to fund its continued faith in video streaming. Langsford says the company has now invested a total of $45 million in its platform – the return on that investment still seems a long way off.

There has been much talk of US giant Netflix entering the Australian market as the profile of content streaming rises. Telstra has a major steaming operation with BigPond Movies, and Foxtel is trying – rather pathetically – with Presto, but steaming has yet to hit the big time in Australia.

Quickflix is hoping it will soon. It needs a million customers, not 100,000. But, with the investment it has made and the foothold it has gained, it must be an attractive takeover target for someone wanting to enter the Australian streaming market. Perhaps that is what the mysterious American raiders are up to.

Something is definitely going on.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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