As Quibi Shutters, So Goes Nearly $2 Billion in Hollywood Investments

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Disney, NBCUniversal, Viacom, Sony Footage Leisure, WarnerMedia, Lionsgate, MGM, ITV, Leisure One — the record of Hollywood heavy hitters that poured cash into Quibi is a veritable who’s who of leisure trade giants. Now, with the closure of the cellular streaming startup led by Jeffrey Katzenberg and Meg Whitman, simply six months after launching, so goes almost $2 billion in funding {dollars}.

In an announcement launched Wednesday, Quibi introduced plans to wind down operations and provoke the sale of its belongings, after which “remaining funds can be returned to its buyers as specified in the Firm’s working settlement.”

Whitman and Katzenberg wrote in an open letter to Quibi’s employees, buyers and companions that “we really feel that we’ve exhausted all our choices.”

“As a outcome now we have reluctantly come to the troublesome choice to wind down the enterprise, return money to our shareholders, and say goodbye to our colleagues with grace,” they wrote. “We wish you to know we didn’t quit on this concept with out a battle.”

Initially dubbed “NewTV” and housed underneath the holding firm WndrCo, Katzenberg and Whitman courted and secured $1 billion in seed-funding in 2018 from each main Hollywood studio, in addition to enterprise capital agency Madrone Capital Companions, main banks Goldman Sachs and JPMorgan Chase & Co, and John Malone’s Liberty World. The corporate additionally gained an funding from China-based e-commerce big Alibaba Group, which owns main streamer Youku Tudou.

Quibi would later shut a second spherical of funding, including $750 million to its coffers only a month earlier than the service launched to the general public in April of this yr, bringing its whole funding sum to $1.75 billion. And Whitman informed Selection final yr that the corporate had bought $100 million in upfront advert stock nicely forward of its launch.

Regardless of the skepticism Katzenberg and Whitman’s firm has confronted since its founding, these high-profile investments supplied trade watchers a way that Hollywood’s legacy establishments thought the startup had an opportunity at breaking by the noise with its extremely produced bursts of TV and film content material.

Quibi CFO Ambereen Toubassy had informed Selection in March that the second increase supplied Quibi with a “very sturdy money runway” that may give it “large flexibility and the monetary wherewithal to construct content material and know-how that customers embrace.”

However the product launched a month right into a pandemic that compelled thousands and thousands of People to enter lockdown mode at house. That meant Quibi was by no means fairly given the prospect to check out Katzenberg’s principle that viewers would pay to look at slices of dramas and unscripted reveals whereas ready in line for espresso at Starbucks, as he envisioned. And Quibi struggled to draw paying subscribers, with the Wall Avenue Journal reporting in June that the corporate was on observe to hit solely 30%, or fewer than 2 million, of its unique 7.4 million sub goal.

As extra begins to trickle out in regards to the state of the corporate, sources say Quibi has an all-hands inside assembly set for six p.m. ET immediately.

“Whereas now we have sufficient capital to proceed working for a major time period, we made the troublesome choice to wind down the enterprise, return money to our shareholders, and say goodbye to our gifted colleagues with grace,” mentioned Whitman in the assertion. “We proceed to consider that there’s a horny marketplace for premium, short-form content material. Over the approaching months we can be working onerous to search out patrons for these worthwhile belongings who can leverage them to their full potential.”

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