Earlier this week we commented that Quickflix is looking increasingly like a takeover target. The idea has now gained further traction with a report in The Australian newspaper that the company has been in talks with Netflix, which has been scouting the Australian market for content deals and other possible business arrangements in front of a possible entry to the local market in 2015.
“Netflix has emerged as the latest media player to run its ruler over local television and movie streaming business Quickflix in a potential play that could be used as a stepping stone for the US streaming giant’s launch in the Australian market,” said the article. “The Australian understands Quickflix has held ‘serious’ discussions with Netflix about taking a strategic stake in the Perth-based business.”
Quickflix founder and CEO has not commented, beyond issuing a statement to the ASX:
“Quickflix notes the media coverage in today's Australian newspaper under the headline ‘US giant wants a piece of Quickflix’. Quickflix maintains a regular dialogue with both local and international participants in the entertainment content delivery industry but advises that it is not aware of any information concerning Quickflix that would require disclosure under the ASX Listing Rules.”
Note that the carefully worded statement does not deny talks are taking place with Netflix, only that they are not of such a nature that any disclosure needed to be made to the ASX. For such a disclosure to take place, Netflix would have had to have made a firm offer, or have actually purchased more than 5% of the company.
Earlier this week Nine Entertainment bought around 10% the stake held by US cable network Home Box Office (HBO) in Quickflix.
Quickflix says it is now cashflow positive, after losses of $6.4 million in 2012-13 and $4.2 million in the first half of 2013-14. Its market capitalisation is now around $16 million. That is much less than it has invested in its impressive infrastructure, which is why it has become making it an attractive takeover target for anyone – like Netflix – wanting to enter the market. Its existing distribution deals would also be attractive to Netflix, which is reportedly having trouble cutting satisfactory deals with Australian content providers.
The article, and Quickflix’s subsequent announcement, had no effect on its shares, which closed at $0.015.