Nine Entertainment Co. has bought HBO’s 8% stake in Quickflix, becoming a significant investor in the DVD rental and subscription streaming service.
HBO invested $10 million in the company in exchange for 83.3 million preference shares at a price of 12c per share, convertible to ordinary shares, in February 2012. HBO’s rep Henry McGee quit the board in November 2012.
The NEC deal was reported today in the Australian Financial Review. That prompted Quickflix to inform the ASX it was seeking information from Nine, later confirming NEC had bought all 91.16 million preference shares from HBO. Quickflix shares were trading at 0.1c, which could value the deal at about $1 million.
NEC isn’t commenting but some observers see this as a small, opportunistic investment rather than a precursor to a full takeover bid. NEC's StreamCo is preparing to launch an SVOD service which will compete directly with Quickflix, and with Foxtel's Presto.
However one pay-TV executive says, “Nine can creep up the QFX register and take control without a takeover premium.”
Another executive speculates that HBO could withdraw its product from Quickflix's streaming service at the end of the current licence period. That would be a blow as HBO's Game of Thrones has been its most popular show.
Quickflix chairman/CEO Stephen Langsford downplays the repercussions of HBO's exit, telling IF, "HBO has been very supportive. We willl continue to stream HBO content."
Langsford says his deal with HBO is "multi-year," and while he would not be specific he suggested it would run for at least two years.
In June Quickflix raised $1.8 million from Australian and international institutional investors, placing 204.2 million shares at 0.9c per share. It said the funds would provide working capital and increased investment in content and marketing.
Quickflix also announced Los Angeles-based David P. Smith, a former VP of 20th Century Fox Television Distribution, had joined the board as a non-executive director. Smith also serves as a consultant to Quickflix on securing Hollywood content.
The board hired corporate advisers Cashel Corporate Finance to help evaluate strategic options for the company.