Quibi nears deal with Roku after trying to tempt Facebook, Snap
Quibi said in October that it planned to wind down operations and sell its assets.
Quibi Holdings LLC, the failed short-video startup founded by film mogul Jeffrey Katzenberg, is close to selling rights to its shows to Roku Inc. following pitch sessions with some of the biggest names in technology, according to people familiar with the matter.
Quibi sought the interest of a range of prospective bidders, including Facebook Inc. and Snap Inc., said the people, who asked not to be identified because the discussions were private. Finding a buyer has been complicated, in part because the company doesn’t own the rights to own its content beyond a few years, the people said.
Completing a transaction would help Katzenberg return at least some of the $1.75 billion that investors, including Walt Disney Co. and AT&T Inc.’s WarnerMedia, poured into the app before its launch in 2020.
Quibi’s programming would add to Roku’s own content library and help the company, which offers a popular streaming device and platform, attract viewers to the Roku Channel.
Quibi and Roku declined to comment, as did representatives for Facebook and Snap.
Quibi, led by Chief Executive Officer Meg Whitman, was one of the splashiest Hollywood startups in years. For $5 to $8 a month, customers could access about 175 original shows that were told in five- to 10-minute increments. The hope was to fill a niche among consumers with on-the-go lifestyles and short attention spans. But facing a pandemic and competition from free alternatives such as YouTube and TikTok, Quibi struggled to attract subscribers.
The company said in October that it planned to wind down operations and sell its assets. The swift demise of streaming service, which only launched in April, represented one of the entertainment industry’s most dramatic flops.
Since then, Katzenberg has led the effort -- with an adviser -- to sell the rights to the shows, which feature stars such as Anna Kendrick, Liam Hemsworth and Chrissy Teigen, one person close to the process said. Those negotiations have been complex because Quibi never owned the shows that appeared on its platform; it licensed them for seven years.
That means buyers are negotiating for a license to show Quibi programs, rather than permanent intellectual property. If a buyer wants to build out Quibi shows with new episodes or series, it may face the same high prices Katzenberg paid when producing the content. Against that backdrop, discussions between Quibi and Facebook, like those with other potential buyers, failed to gain traction, the people said.
Quibi’s investors included media titans and firms such as Goldman Sachs Group Inc. Late last year, they were told to expect about $350 million back, after Quibi burned through most of the cash to launch the app. The amount they can recoup will rise if Katzenberg can complete asset sales.
The discussions with Roku were reported earlier by the Wall Street Journal.
Snap, which owns Snapchat, has invested in its own content, which it presents as Snap Originals. Facebook, meanwhile, has launched Facebook Watch, an on-demand video service that includes new shows with performers such as Taraji P. Henson. Instagram, also part of Facebook, offers the IGTV Series, a longer-form video platform.
Roku has been slower to create its own programs. Its chief financial officer, Steve Louden, said in a March conference call that while the company was interested in licensing content, “We don’t have any plans for original content.”
By Kelly Gilblom, Lucas Shaw, and Gillian Tan