Quokka Sports, Inc. a leading provider of sports entertainment for the digital world, today announced a major restructuring plan to realign the Company to maximize its core capabilities with profitable business opportunities, streamline operations and reduce its cost structure.
Recognized as one of the most innovative media technology companies in the United States, Quokka Sports will focus its core business on live sport event coverage and will be setting up its technology infrastructure division as a separate business unit to provide managed services for companies needing to create rich content for the Internet, broadband, Interactive/Enhanced TV and wireless platforms. The restructuring of the Company’s business is expected to diversify revenue opportunities while significantly reducing operational costs.
‘The current financial challenges faced by all media companies in the Internet marketplace today make it necessary for us to diversify our business model beyond sponsorship, content syndication and consumer revenues. As a result, we are structuring our business to best maximize the value of our strongest assets as we continue to focus on live sport event coverage and sponsorship sales, while expanding the application of our robust and proprietary technology platform. In addition, we will now market these unique capabilities to select rights holders, media companies and corporations on a fee for service basis,’ said Alvaro Saralegui, President and CEO.
Saralegui continued, ‘The realignment of our business allows us to focus on profitable opportunities while minimizing financial risk. We are moving quickly to implement our new structure, and we are confident we are building a foundation that will allow us to manage our business successfully while conserving our cash reserves.’
Maximizing Core Assets in Media Production and Technology
Starting immediately, Quokka Sports’ media business, the Quokka Sports Network, will focus on event-centric programming with the continued emphasis on the production of live sport events, including the re-launch of golf.com, the Olympics, the NCAA Championships with associated conference and college coverage, Major League Baseball, BT Global Challenge around the world sailing race, and MountainZone adventure sports. Live events to be produced in the March quarter 2001 include the PGA Tour’s Southern Swing golf tournaments on golf.com, the Mens’ and Womens’ Division I NCAA basketball championship tournaments on FinalFour.net, and ongoing coverage of the BT Global Challenge sailing race on btglobalchallenge.com. On February 8, 2001, the Company’s Olympic coverage kicked off with the re-launch of SaltLake2002.com, the official site for the 2002 Winter Olympic Games.
‘We have terrific sports entertainment products that reached over four million sport fans monthly in the December 2000 quarter and featured top quality sponsors. To maximize the profitability of our entertainment products, we will be centralizing production resources and focusing on sport events that show the strongest financial potential. Our new model will allow us to expand our event opportunities and pursue new business that in the past we have been unable to accommodate, such as live event coverage for third parties. With more flexibility in the way we monetize our coverage of events, we will be able to continue to provide state of the art sports entertainment coverage while decreasing costs,’ said Tom Newell, Senior Vice President, Quokka Sports Network.
The Company’s proprietary technology and publishing platform infrastructure will continue to be utilized for its live sport event coverage, and in addition, will begin operating as a separate business unit. The new business unit will provide managed services for companies needing to create rich content for the Internet, broadband, Interactive/Enhanced TV and wireless platforms.
The infrastructure developed over the past five years includes a state of the art media publishing system that excels at live event production and has capabilities that include the delivery of rich media content on multiple platforms and the ability to integrate multiple media assets. The system is also scalable and flexible in architecture with modular design and location independence. Over the last four years, the publishing system has covered thousands of live sports events, and, under the new business structure, the Company will pursue new opportunities for the publishing system including event production for sports, as well as in other industries.
‘No single media company can support the level of investment Quokka has made in technology, and it is evident there is a real business need for our platform and its services outside of the Company. The new business unit will now make our expertise and platform available to a much broader set of customers, including enterprises outside of the sports industry. The Internet infrastructure remains a significant growth industry and Quokka has been a demonstrated leader in technology platform innovation and convergence between media, such as TV and the Internet,’ commented Alan Ramadan, Chairman and co-Founder.
Restructured Model Diversifies Revenue Opportunities
Quokka will continue to sell sponsorship for its live event coverage and sponsors will continue to benefit from reaching one of the most highly targeted and desirable demographics, sport enthusiasts. To diversify beyond sponsorship revenues, the Company’s expansion into live event production for rights holders, media companies and corporations on a fee basis is a strategy to capture business from new budgets with less financial risk.
The restructured business model allows the Company to streamline operations substantially and, as a result, reduce its 369 employee headcount by approximately 59% before the end of the second quarter 2001. The financial impact of the one-time charge for severance and related costs is estimated to be approximately $1 million in the first quarter of 2001. Under the new structure, the Company anticipates that its operational loss should be reduced considerably and estimates the cash burn rate will be reduced by over 65% to less than $2 million per month, starting in March 2001. This projection assumes no improvement in the online advertising market.
For more details contact:
Investors, Kate Rajeck of Quokka Sports, Inc., 415-908-3800, or investor.relations@quokka.com;
Press, Cheryl Herbert of OutCast Communications, 415-392-8282, or cheryl@outcastpr.com, for Quokka Sports, Inc.