It could be quite a fire sale after Quibi’s nearly $2 billion flameout: The Jeffrey Katzenberg-founded company has tapped LionTree to manage the process of selling Quibi’s assets, following its decision to shut down.
A rep for LionTree confirmed that the firm has been enlisted by Quibi in an advisory capacity to evaluate in-bound inquiries from interested parties. New York-based LionTree, led by CEO Aryeh Bourkoff, is a boutique investment bank and financial advisory firm specializing in the media and telecommunications sector.
On Wednesday, Quibi announced that its board had decided to shut down the company, less than seven months after launching in April. The startup, led by Katzenberg and CEO Meg Whitman, told customers Thursday that it expects to shut off the streaming service “on or about” Dec. 1 — but that it didn’t know whether any of Quibi’s originals would be available on other platforms after that. Several of Quibi’s content partners, who were blindsided by the shutdown news, are now scrambling to find new homes for their productions.
Quibi’s asset-sale process may result in the transfer of its rights to some originals to new distributors. But any dealmaking will be a bit complicated: Quibi has licensed dozens of programs for its service, but doesn’t actually own any of the. Under its agreements with the content owners, Quibi had secured seven-year licenses, with the producers of the shows retaining the right to assemble the shows and distribute them elsewhere two years after they premiered on the streamer.
Meanwhile, a sale of Quibi’s technology will likely come with a legal string attached: Eko, the interactive-video company that filed a lawsuit against Quibi alleging patent infringement and trade-secret theft over Quibi’s Turnstyle feature, said this week it will continue to pursue the legal action. Quibi has called Eko’s claims baseless.
With Quibi, the movie-mogul-turned-entrepreneur Katzenberg hoped to create a brand-new streaming category — but it bombed in spectacularly short fashion. His untested hypothesis was that smartphone-centric millennials would shell out for short-form, HBO-style originals. Investors including Disney, NBCUniversal and WarnerMedia ponied up about $1.75 billion, given Katzenberg’s movie-mogul pedigree. With its war chest of cash, Hollywood bold-face names clambered aboard, attracted by Quibi’s huge budgets, upwards of $6 million per hour of produced content.
Ultimately, however, consumers — with a bountiful and growing smorgasbord of other video options — failed to bite on the service, which carried monthly pricing of $4.99 (with ads) and $7.99 (without ads). As of the third quarter, Quibi reached 710,000 subscriber households, down 300,000 from the prior quarter, per estimates from research firm Kantar.
Quibi also made a misstep in sticking to Katzenberg’s original concept of a mobile-only service even after it was clear that viewers wanted to stream the content on living-room TVs. The company finally launched native apps for Apple TV, Amazon’s Fire TV and Android TV this week — just two days before it said it is winding down.
Katzenberg, in a statement this week, expressed gratitude to Quibi’s employees, investors, talent, studio partners and advertisers. He boasted about having “assembled a world-class creative and engineering team that has created an original platform fueled by groundbreaking technology and IP, enabling consumers to view premium content in a whole new way.”
While acknowledging that “our standalone business model is no longer viable,” he also said that “the world has changed dramatically since Quibi launched,” evidently a reference to the COVID pandemic.