Asian production companies are being kept in suspense by a liquidation of the now defunct streaming service Hooq that is taking a painfully long time to execute.
Further, many former staff remain unhappy at the treatment they have received at the hands of Singapore Telecommunications (Singtel), the state-backed telecoms giant that owned more than 80% of Hooq, and which called in the liquidators at the end of March.
Burdened by mounting losses and attempting to succeed in a fast-evolving Southeast Asian streaming market, Hooq lost its battle to stay in business when Singtel decided that enough red ink was enough.
Hooq’s numbers are indeed horrible. A document published by Singapore’s Accounting and Corporate Regulatory Authority showed that in the 12 months to March last year, Hooq lost $63.9 million and had five years of accumulated losses that amounted to $221 million. Another year of trading to March 2020 could only have deepened the hole, though the actual figures remain confidential for now. In its most recent quarterly results, Singtel recorded a “deconsolidation loss” of $60.5 million (S$86 million) against Hooq.
The shutdown decision appears to have been a unilateral one taken by Singtel. It is not clear that either of Hooq’s minority shareholders WarnerMedia and Sony’s AXN Investments was involved. They had anyway lost their board seats back in 2018.
A source close to Singapore’s Infocomm Media Development Authority told Variety that the organization had been kept in the dark, and that the media regulator learned of the announcement at the same time as everyone else. Other sources have told Variety that takeover bids to buy Hooq were on the table, but were not pursued.
It is unclear what proportion of Hooq’s management knew the ax was falling. Or when they knew it.
Despite the gathering clouds, Hooq continued to commission new content, building towards its publicly-announced target of 100 new original shows, until about four weeks before Singtel’s March 27 announcement. On Feb. 20. Hooq announced six pilot shows from its so-called Filmmakers Guild were due to air in April.
But by early March, and prior to Singtel’s death blow, Variety had already been contacted by two Asian production companies who said they were having difficulty getting paid by Hooq for work done.
In an emailed statement, a Hooq spokesman in April named two producers it said had been made whole “All invoices due to date for ‘Lovestalker’ with T-Company are paid to date.” The spokesman denied that Thailand’s Kantana was an unpaid creditor, as a show it was preparing had not set its production schedule and they were still looking for partners.
Despite these reassurances, several more companies have since told Variety that they are owed money by Hooq for projects and productions. None, however, are willing to allow their names to be published.
Nevertheless, one production company explained that Hooq had missed two of its three stage payments. That points to a problem that did not simply happen on the fatal day Singtel threw in the towel and handed over the business to the Nicky Tan company of temporary liquidators.
With Singapore under lockdown — known locally as circuit-breaker measures — some 40 people attended a virtual creditors’ meeting in mid-April. Employees were not represented.
Making the “voluntary liquidation” substantially more complicated is the existence of Hooq Mauritius, a related company, 77% owned by Singtel, through which most of the content deals were channeled.
Hooq Mauritius has a separate board of directors, and is being handled differently. The liquidation process appears to have begun there on May 5. But government offices and courts in Mauritius remain closed until June, due to anti-coronavirus measures.
While Hooq Mauritius contracts were mostly governed by Singapore law, the purpose of an offshore vehicle holding rights to proprietary IP has not been publicly explained.
Without the dismantling of the Mauritius unit, the Singapore liquidators only have a limited amount of assets to sell. And while several Asian producers have said they await a list that would show matters such as titles, attachments, payment status and ownership claims, Hooq’s liquidators may never disclose one. Instead they have published an advertisement inviting creditors contact them and make their claims.
Any hold-up in either establishing a public asset list or liquidating Hooq Mauritius keeps creditors in the dark and prevents would-be content buyers from making meaningful bids.
Delay may also devalue the IP — those films and shows branded as “Hooq Originals” are especially problematic — and encourage piracy.
“Their contracts were so one-sided that they amounted to work-for hire anyway,” one producer told Variety. “We would have a good case to get back the IP, but at the cost of several hundreds of thousands of dollars, it might not be worthwhile.”
Another Asian production company that identified itself as a creditor questioned the role of Singtel, which is an end-user that owns several other media and broadcast platforms. “I can’t understand why Singtel didn’t simply buy out all the (content) creditors,” said the producer.
Singtel is Singapore’s fourth largest company with an array of mobile, fixed line, IPTV and broadband operations, and has a majority stake in Australia’s number two mobile carrier Optus. Singtel is majority owned by Singapore sovereign wealth fund Temasek.
By Singtel’s own admission, it would not have been financially troubling. In March, Singtel said it “does not expect Hooq’s liquidation to have a material impact on (its) net tangible assets or earnings per share.”
Several of Hooq’s 220 employees are also aggrieved that the $31 billion (S$44 billion) parent company has done only the bare minimum. Employees in Singapore and India were paid salary equivalent to their notice period, as Singapore law requires. But they did not receive severance pay, unlike Hooq employees in The Philippines, Indonesia and Thailand, where laws are more protective of employees.
“For several years, we worked in Singtel offices, carried Singtel staff passes, and had Singtel email addresses,” one former Hooq employee complained. “Now, in the midst of the coronavirus crisis, we are shown the door.” Variety understands that some Hooq employees have since been offered positions within Singtel, but it is unclear how many.
Singtel and the liquidators did not respond to Variety’s enquiries. Hooq management, similarly, took no questions. An internal spokesman for Hooq, which went dark on April 30, said: “I don’t have a timeline on when I will receive the answers.”