Viaplay Group, a Swedish streaming service company, has put the entire organization up for sale following a substantial loss of 5.89 billion kronor ($574 million) in the second quarter of this year.
The company, which competes with Netflix, has also made the difficult decision to lay off over 25% of its workforce and withdraw from various markets.
The company has now lost 80% of its market value after slashing guidance for 2023 and replacing its chief executive officer in early June.
Investors King understands that the decline was due to the aggressive “pursuit of subscriber volume growth” that cost the company its value.
Jorgen Madsen Lindemann, the Chief Executive Officer, admitted that the assumptions made regarding their initiatives, particularly the international expansion, did not yield the expected results.
He also acknowledged that content costs in the Nordics were surpassing their revenues.
“It’s a fact that the assumptions on the range of initiatives that we have had, particularly around international expansion, are not adding up,” Lindemann said by phone.
“We also see that our content cost in the Nordics are to some extent exceeding our revenues.”
In response to these challenges, Viaplay is now focusing on its operations in the Nordic region, the Netherlands, and Viaplay Select. Simultaneously, they are exploring effective solutions such as partnerships, asset sales, and market exits for their other markets before 2024.
To address their financial situation, the organization must negotiate with creditors and tackle funding challenges through discussions with lenders, banks, and bondholders, as pointed out by Chief Financial Officer Enrique Patrickson.
“The core bank group we work with is very aware of the situation and is looking at our cash profile,” the CFO said via phone, adding that the potential covenant breach relates to the firm’s projection of a negative free cash flow for both 2023 and 2024.