Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

Analysis, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Nov 17 2014

Broadcast graphics specialist ChyronHego announced that it has entered into a definitive agreement with Vector Capital, under which an affiliate of Vector will acquire all of the outstanding shares of ChyronHego common stock for $2.82 per share in cash.

San Francisco-based Vector Capital is a private equity firm with experience in the digital media sector. Recent portfolio investments include Corel and Technicolor. To fund the ChyronHego deal, Vector has secured committed financing consisting of a combination of equity and debt.

This is the second recent take-private transaction of a broadcast graphics provider. Earlier this month. Vizrt announced that it will be taken private by Nordic Capital in a $374m all-cash deal.

The $2.82 per share purchase price represents a premium of approximately 18% over the company’s average closing share price for the six months ending on November 14, 2014, and a 4% premium over the company’s closing share price on November 14, 2014, the last day of trading before the announcement.

Based on the total number of shares outstanding in ChyronHego, the deal equates to an equity value of approximately $114m. After backing out the cash on the company’s most recently published financial statements, this represents an enterprise value of approximately $108m.  On a valuation multiple basis, this is approximately 1.8x trailing 12 month’s revenue.

According to a shareholder FAQ, ChyronHego’s management team will stay the same after the transaction closes. Johan Apel will continue as CEO, and Soren Kjellin will continue as CTO.

The contractual details of the ChyronHego – Vector Capital agreement are complex and worth a longer discussion. We are preparing an analysis of the deal, and we will post this later this week.

A very brief synopsis of certain deal points follow:

  • Technically, the deal is a merger rather than an acquisition. ChyronHego is being merged into an entity controlled by Vector Capital, in order to create a new corporate entity, which will also be owned and controlled by Vector Capital.

 

  • All major shareholders on the ChyronHego management team have agreed to re-invest approximately 50% of their holdings in ChyronHego into the new corporate entity, for which they will receive approximately 31% of the equity in the new entity

 

  • Interestingly the merger agreement includes a “go shop” provision whereby ChyronHego has seven weeks to find a buyer who will offer a higher price than Vector Capital’s offer of $2.82 per share. Given Vizrt’s valuation in the Nordic Capital deal, and the fact that shares of ChyronHego have traded above $3.00 several times during the past year, it is possible that ChyronHego will be able to find a better offer. However, the “go shop” provision includes termination fees that will triggered under specified circumstances such as the acceptance of a superior offer. The company says it does not intend to disclose developments with respect to the solicitation process unless and until a decision has been made in respect to any potential superior proposal. 

 

The transaction is subject to customary closing conditions and most notably the approval by holders of two-thirds of ChyronHego’s outstanding shares and the approval by holders of a majority of shares held by current ChyronHego’s stockholders who will not become stockholders in the going-forward entity.  The Company expects the transaction to close in the first quarter of fiscal 2015.

The company said that its  board of directors and a special committee of the board composed entirely of independent directors have unanimously approved the deal, and have recommend that ChyronHego’s stockholders approve the transaction

“We are very happy to announce this partnership with Vector Capital, an established global technology oriented private equity firm that is focused on building long-term value. Our management is convinced that this is the right opportunity at the right time for ChyronHego’s customers, employees and stockholders,” said Apel.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.

.

.

Related Content:

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

Top Broadcasters and Content Owners to Debate Key Trends Driving Future Technology Strategy at CCW Conference

broadcast industry technology trends, broadcast industry trends, Conference Sessions, market research | Posted by Joe Zaller
Nov 11 2014

If you are interested in better understanding how the dynamic changes in the media industry may impact future technology purchasing and deployment strategies at top broadcasters and content owners, you won’t want to miss the panel discussion that I will be moderating at the CCW / SATCON conference.

The session is called “Key Trends Driving Media Technology Investments,” and it happening on Thursday November 13th at 11:30 a.m. in Room 1A14 of the Javits Convention Center in New York.

Discussion topics will include strategic drivers of broadcast technology spending, key customer investment areas, new technology deployment trends, and the most significant industry trends impacting end-user purchasing decisions.

An outstanding panel of four senior M&E technology executives will offer informed perspectives on the most significant trends in the industry, and how their technology purchase decisions are being driven by these shifts in the market.

Confirmed participants include:

  • Richard Friedel, Executive Vice President & General Manager, FOX Networks Engineering & Operations

 

  • Fred Mattocks, GM, English Services, Media Operations & Technology; Chair, Technology Strategy Board, CBC

 

  • Delbert Parks III, SVP and Chief Technology Officer, Sinclair Broadcast Group

 

  • Diane Tryneski, Executive Vice President, Media & Production Operations, HBO Enterprises

 

In addition, the audience will benefit from a summary of key data derived from a variety of broadcast market intelligence projects including Devoncroft’s 2014 Big Broadcast Survey (BBS), the industry’s definitive demand-side market report.

Please note that this event is part of the paid conference at CCW. You can register for the CCW Conference here.

This should be a great session. I hope to see you there.

.

.

Related Content:

CCW Session Description — Key Trends Driving Media Technology Investments

2014 CCW Conference Registration

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Nov 10 2014

Broadcast graphics and MAM specialist Vizrt announced that it will be taken private in an all-cash deal that values the company at $374m.

The buyer is Nordic Capital, a leading Nordic PE firm with four active funds with over EUR 11 billion in total committed capital. Under the terms of the deal Vizrt will be merged with 24 October Holding AG, an entity indirectly controlled by Nordic Capital Fund VIII, and NOR Merger Sub Ltd.

The transaction values Vizrt at a 32% premium to the company’s closing share price November 7, 2014, the last trading day prior to the announcement of the deal, and a 35% premium to the company’s six months volume weighted average share price of the for the period ending on November 7, 2014.

“I and the management team are excited about the opportunities we all believe we have ahead of us,” said Vizrt CEO Martin Burkhalter. “Nordic Capital is very committed to support our growth strategy going forward. Being a privately owned company opens up for accelerated growth opportunities through, amongst others, future acquisitions that support our long-term strategy. The discussion management has held with Nordic Capital over the last few months gives us the necessary confidence that Nordic Capital will fully back-up our continuous efforts to stay ahead of the game by further strengthening our innovative capabilities.”

The deal is expected to close on or around January 31, 2015, provided all conditions for completion have been fulfilled.

Completion of the transaction is subject to the approval by a Shareholders Meeting of Vizrt by simple majority which is expected to be held on or about December 18 2014. Shareholders representing 51.5% of the total share capital of Vizrt have declared that they will vote in favor of the deal

“Our Board has undertaken a careful review of the terms and conditions of the Merger and is unanimous in its recommendation. We consider the cash based offer as fair and in the best interest of our shareholders. We believe that Nordic Capital, with its breadth of expertise and proven track record of developing companies, will be a strong owner of Vizrt.” stated Dag J. Opedal, Chairman of the Board of Directors of Vizrt.

The Company and Nordic Capital shall cooperate for a delisting of the Company’s shares from the Oslo Stock Exchange as soon as possible after the Merger becomes effective.

.

.

Related Content:

Press Release: Nordic Capital to pay NOK 37 in cash per VIZRT Ltd. Share

.

.

© Devoncroft Partners 2009 – 2014. All rights reserved.

.

.

EVS Parts Ways with CEO Joop Janssen Over Differing Opinions on Strategic Implementation

broadcast technology market research | Posted by Joe Zaller
Oct 13 2014

Production and playout video server specialist EVS announced that CEO Joop Janssen is leaving the company, effective as of October 14, 2014.

Jassen remains available to EVS as an advisor, allowing for a smooth transition.

The decision was made during a meeting on October 10, 2014, during which the company’s board of directors and Janssen mutually agreed to end the term of the office and duties of Janssen as managing director and CEO of EVS.

According to EVS, Jassen and the company are parting ways “due to differences in view about the implementation of the company’s long term strategy.”

EVS says its board of directors has launched the search for a new CEO.

In the interim, Muriel De Lathouwer, currently a member of the Board of Directors of EVS, chairing the Strategy Committee, has been appointed as the President of the Executive Committee. “I have great confidence in Muriel De Lathouwer’s capacities to perform this task, in close cooperation with the management team in place,” Pierre Rion added.

Jassen, who was named CEO of EVS in 2012, unveiled a new corporate strategy in early 2013 that focused EVS on four key markets: Sports, Entertainment, News and Media.  At that time, Janssen said the new strategy will “enable us to better deliver our investments in R&D and product innovation, help drive the expansion of our sales network, and continue to improve our user training and customer support and bring even better products to the market faster.”

“The entire Board of Directors would like to thank Joop Janssen for his work during the past two years. Under his leadership, the structure of EVS has been strengthened and professionalized, enabling the company to further grow in its four key markets: Sports, Entertainment, News and Media,” said Pierre Rion, Chairman of the Board of Directors of EVS.

Prior to joining EVS, Jassen was the Chief Executive of the Videocom division of the Vitec Group. During his nine years with Vitec Videocom he was the architect behind its significant profitable growth and brand expansion. Prior to that he was VP and General Manager of Phillips Broadcast (formerly BTS) North America where he was instrumental in the successful divestment to Thomson Multimedia and the subsequent acquisition of the Grass Valley Group. He has held senior and executive management positions including those at Philips Electronics Digital Networks in France and Philips Business Electronics in the Netherlands.

EVS says its board of directors has launched the search for a new CEO.

In the interim, Muriel De Lathouwer, currently a member of the Board of Directors of EVS, chairing the Strategy Committee, has been appointed as the President of the Executive Committee. “I have great confidence in Muriel De Lathouwer’s capacities to perform this task, in close cooperation with the management team in place,” Pierre Rion added.

During her career, Muriel De Lathouwer worked for Accenture, was Associate Principal at McKinsey and a member of the Executive Committee at Base (KPN). She is an Engineer from ULB (University of Brussels) and holds an MBA from INSEAD.

.

.

Related Content:

Press Release: EVS Announces Departure of Joop Janssen, Managing Director and CEO

EVS Posts Record Revenue in 2012, Unveils New Strategy and Vision for Future

Press Release: EVS Broadcast Equipment Appoints Joop Janssen as CEO

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

There’s a Lot of Talk About Cloud Technology in Media & Entertainment, But What’s Actually Being Deployed?

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, market research | Posted by Joe Zaller
Sep 30 2014

This is the second in a series of articles about some of the findings from Devoncroft’s 2014 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2014 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

.

There’s no question that cloud technology is a hot topic in the media and entertainment industry.

Indeed, it seems that these days you can’t read anything about industry technology trends (in broadcast or any other industry for that matter), NAB or IBC Show wrap-up piece, and/or manufacturer white paper, without coming across some mention of “the cloud.”

We see this in our own research too.

In the 2014 Devoncroft BBS Broadcast Industry Global Trend Index, “Cloud Services / Cloud Technology” was ranked the #5 in terms of the industry trends that are most important commercially to broadcast technology end-users world-wide.

This indicates that while there continues to be skepticism (not to mention security concerns) about cloud technology, the acceptance of (or at least the willingness to consider) cloud technology and services increased rapidly in 2014.

For example, data from the Devoncroft 2014 Big Broadcast Survey (BBS) Global Market Report shows that Cloud Services / Cloud Technology had one of the largest year-over-year percentage increases in terms of broadcast technology end-user project spending, when compared to wide variety of other capital projects.

So while there is still a great deal of hype about cloud in media and broadcast, there also appears to be genuine interest on the part of buyers to actually deploy technology in the cloud.

But what are buyers of broadcast technology actually planning to deploy in the cloud, and do they actually trust cloud technology?

To find out we asked participants in our 2014 Big Broadcast Survey (BBS) what they have already deployed, or plan to deploy in the cloud over the next 2-3 years.

Since we typically get about 10,000 people in 100+ countries participate in the BBS (thanks to all who participated, we really appreciate the time you spent sharing your feedback and opinions), we’ve gathered a lot of data on this and many other topics.

As simple example is shown in the “word cloud” below, which provides a graphical representation of how the many thousands of broadcast technology end-users who participated in the 2014 BBS responded to this simple question:  “what have already deployed in the cloud, or plan to deploy in the cloud over the next 2-3 years?”

Please note that the chart shown below is derived from “free-text” answers received in 10 separate languages from the many thousands of 2014 BBS respondents, so there is a lot going on in this diagram.

The free-text responses from 2014 BBS participants were used to create the “word cloud” shown below, whereby the font size of each term was made larger based on how often it was mentioned by 2014 BBS respondents (the colors do not mean anything, but they are pretty).

 

 

2014 BBS -- Likely Cloud Deployments in Broadcast Over Next 2-3 Years (small)

 

 

Although the data in this chart just scratches the surface in terms of the overall scope of opinions captured in the 2014 BBS, it’s a useful illustration of what broadcast technology buyers are thinking about actually deploying in the cloud.

It’s probably not surprising to most readers that “storage” was the use-case mentioned most often by 2014 BBS participants. The combination of low-cost digital acquisition technology, ever-increasing shooting ratios, and the desire to monetize content assets over multiple distribution platforms is driving the need for more storage (both on and off-premise). As one vendor told me recently, “the one thing I can tell you about content archives is that they are not getting smaller every day.”

More interesting, is that when you compare the above diagram with how last year’s BBS respondents answered this same question, is appears that there is more consensus beginning to emerge about media use-cases for cloud technology beyond the obvious.

In previous years, BBS respondents also reported that storage was one of the most important things they planned to deploy in the cloud.  However, after storage, the next most important response was typically “I Don’t Know.”

While there are still some BBS respondents who remain unsure about their cloud deployment plans, there are now many fewer, and it appears that in 2014 broadcast technology end-users are more serious than ever about deploying cloud technology.

In 2014, commonly cited use-cases for media and entertainment cloud deployments include streaming, archiving, editing, transcoding, and content distribution.

It’s also interesting to see specific vendors (including Adobe, Amazon AWS, Apple, and Dropbox) being frequently mentioned as being “the thing” that will be deployed in the cloud. This may indicate that technology buyers are looking to these vendors to provide them anything from specific cloud-based tools, to a complete end-to-end cloud solution.

Leaving aside specific technologies and vendors, sometimes it’s more useful to “zoom out to a 10,000 foot view” of the potential deployments of cloud technology in the professional media and entertainment industry.

Considered from this perspective, we believe that more significant than the technologies and vendors mentioned in the above chart, is the fact that cloud technology is being seen as increasingly important by major broadcasters and media companies.

There is plenty of evidence to support this premise, including several recently announced end-user initiatives and many discussions about creating a “virtualized broadcast infrastructure” in order to drive greater efficiencies. If this is the case, there are significant implications for all involved in the media supply chain, including both vendors and end-users.

Much more information about the attitudes of broadcast technology buyers towards cloud technology, and what broadcast technology buyers are likely to actually deploy in the cloud is available from Devoncroft Partners as part of our 2014 BBS Global Market Report. This report also includes information about what technologies end-users are planning to deploy in the cloud, when they are planning to deploy them, and what efficiencies they hope to achieve by doing so.

.

.

Related Content:

2014 Big Broadcast Survey (BBS) Reports Now Available

2014 Broadcast Industry Market Research from Devoncroft Partners

Devoncroft Research: IBC 2014: Observations and Analysis of Broadcast and Media Technology Industry (free 52 page report, registration required)

2014 BBS: Ranking the Most Important Trends in the Broadcast Industry, Based on Commercial Importance to End-Users

2013 BBS: With All the Hype About Cloud, What Are Media Organizations Actually Going to Deploy?

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

Ranking the Most Important Trends in the Broadcast Industry, Based on Commercial Importance to End-Users

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, market research | Posted by Joe Zaller
Sep 29 2014

This is the first in a series of articles about some of the findings from Devoncroft’s 2014 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2014 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

 

Measuring the Most Important Trends in the Broadcast and Digital Media Technology Industry

Each year, Devoncroft Partners conducts a large-scale global study of the broadcast industry called the Big Broadcast Survey (BBS).  Nearly 10,000 broadcast professionals in 100+ countries participated in the 2014 BBS, making it the most comprehensive study ever done in the broadcast industry.

One of the key outputs from the BBS is the annual BBS Broadcast Industry Global Trend Index. This is a ranking of the broadcast industry trends that are considered by BBS respondents to be the most commercially important to their businesses in any given year.

In order to ensure that the trends we measure each year in our research are the most relevant to the industry, we spend a considerable amount of time seeking feedback about the structure of our reports from a wide variety of industry professionals.

As part of this process, the composition of the BBS Broadcast Industry Global Trend Index is reviewed each year in conjunction with Devoncroft clients, broadcast technology end-users, and a variety of domain experts.  New trends are added to the Index when BBS stakeholders believe that the value of this additional trend information outweighs the resulting distortion of the year-over-year comparisons.

Based on the input we received during the planning stages of the 2014 BBS project, it was decided that the following two trends should be added to the list of trends included in the composition of the 2014 BBS Broadcast Industry Global Trend Index:

  • 4K / UHD
  • Remote Production

 

The benefit of this change is that we were able to capture a significant amount of information about information about the perceptions of 4K/UHD and remote production, including deployment plans.

The downside of this approach is that the inclusion of new trends will almost certainly cannibalize the rankings of other trends in our Index. Therefore, it is slightly more complicated to make a 1:1 comparison of how trends were ranked in 2014 versus 2013 across different demographics.

 

The 2014 BBS Broadcast Industry Global Trend Index

To create the 2014 BBS Broadcast Industry Global Trend Index, we presented BBS respondents with a list of 18 industry trends and asked them to tell us which one trend they consider to be “most important” to their business, which one trend they consider to be “second most important” to their business, and which other trends (plural) they consider to be “also very important.”

We then apply a statistical weighting to these results, based on how research participants ranked the commercial importance of each trend.

Please note that our goal from this question is to help clients gain insight into the business drivers behind the respondent’s answer. Therefore, respondents were asked to rank these trends in the context of the commercial importance to their business, rather than “industry buzz,” or “cool technology,” or marketing hype.

The table below shows the 2014 BBS Broadcast Industry Global Trend Index.

 

2014 Devoncroft BBS Broadcast Industry Global Trend Index

 

Keep in mind that this chart shows a measure of what people say is important to the future of their businesses, not what they are doing now, or where they are making money today.  These topics will be addressed in future posts.

Please note that this chart shows a weighted index, not a measure of the number of people who said which trend was most important to them.

Also, please note that this chart measures the responses of all non-vendors who participated in the 2014 BBS, regardless of company type, company size, geographic location, job title etc.  Thus the responses of any demographic group such as a particular company type or geographic location may vary widely from the results presented in this free summary information.

The fact that multi-platform content delivery (MPCD) is considered by respondents to be the industry trend that is most important commercially to their business jumps off the page, and is perhaps not surprising, given the rise of on-demand video platforms, consumer mobility, and sales of smartphones and tablets.  Indeed, across multiple studies, research participants have repeatedly told us that multi-platform content delivery is the trend that is most commercially important to their business over the next several years.

However, our discussions with broadcasters, content owners, and technology vendors indicate that despite the obvious fact that the way content is delivered and consumed has changed forever, this has not yet translated into profitable revenue streams for end-users.  There are a number of reasons why this is the case, and these have significant implications for content owners, broadcasters, and technology vendors.

These will be addressed in future posts, as well as on the Devoncroft website.

Although multi-platform content delivery is by far seen as the most important trend in 2014, there are quite a few other interesting things to consider in the above chart.

Since the first BBS Broadcast Industry Global Trend Index was published in 2009, “multi-platform content delivery,” “file-based / tapeless workflows,” “IP networking and content delivery” and transition to HDTV operations” have been the top ranked trends.  However their relative position has shifted dramatically.  For example, in 2009, the transition to HD operations was the #1 ranked trend globally, and MPCD was ranked #4.  In 2014, these were ranked #6 and #1 respectively.

For a number of years the transition to HDTV operations has been a major driver of end-user technology budgets, and therefore technology product sales. The HD transition continues to be and is likely to remain one of the strongest drivers of broadcast industry revenue, particularly in emerging markets, but has this year dropped to the #6 position on a global basis.

We provide significant coverage of the global transition to HDTV operations in the 2014 BBS Global Market Report (report available for purchase). This includes a granular breakdown of the current and projected future progress that end-users have made in their transition to HD, as well as the upgrade plans for more than a dozen product categories including cameras, switchers, routers, servers, graphics, encoders, communication links, and encoders. We’ll also be publishing more information about project-based spending and the HD transition later in this report, as well as on the Devoncroft website.

Another trend that has become increasingly more important over the past several years is “IP networking & content delivery,” which is ranked as the #2 most important trend in the 2014 BBS Global Trend Index.

The move to IP-based infrastructure become increasingly important as broadcast technology buyers continue to look for efficiencies as they transition to new technical platforms and business models.  In 2014, the move to IP-based infrastructure took on a new sense of urgency as buyers began to seek ways to implement IP-based systems in broadcast operational environments.

With new standards (e.g. SMPTE 2020-6), new market entrants (e.g. Arista Networks), and a high-profile joint task force on networked media (JT-NM), sponsored by the EBU, SMPTE, and VSF; the move to IP not only looks more and more inevitable, it is also likely to be a major industry driver over the mid to long-term.  As a result, we believe that the coming move to IP (which is still at least a year or two away in practice) has profound implications for both broadcast technology buyers and suppliers.

The move to IP is driven by an ever-increasing desire for broadcast technology buyers to gain operational efficiencies.  We believe this trend is set to accelerate, and will continue to be a strong macro driver of the overall industry for the next several years, as broadcasters continue to deploy new workflows.

The trend ranked #3 in the 2014 BBS Global Trend Index, “file-based / tapeless workflows,” is another indication of the importance of increased efficiency for broadcast technology end-users.  This trend has accelerated as the transition to HDTV (ranked #6 this year) begins to wind down in developed markets around the world.

Over the past several years, we’ve observed a pattern whereby broadcasters, who have invested considerable time, effort, and money into transitioning their operations to HD, begin to shift their focus towards increasing the efficiency of their operations.

Over time, efficiency has become a key driver of broadcast technology purchasing.  In fact, our research shows that in many cases, increased operational efficiency and cost savings are more important than cutting-edge technology.

This is because the economics of the entire industry have changed – because of MPCD and other factors – and as a result, end-users must change their cost structure (radically in some cases) in order to generate sustained profitability into the future.

This has implications for the broadcast industry in terms of both workflows and product procurement, and as a result, the importance of both file-based workflows and “IP networking & content delivery” has increased as broadcast technology buyers continue to look for efficiencies as they transition to new technical platforms and business models.  The desire for broadcast technology buyers to gain operational efficiencies will likely continue to be a strong macro driver in 2014, as broadcasters continue to deploy new workflows.

The trend ranked #4 in the 2014 BBS Global Trend Index is “4K / UHD.

2014 is the first year that we have included 4K / UHD as a component of the BBS Global Trend Index. It was added based on feedback from our clients, readers, and stakeholders.  The fact that 4K / UHD is ranked #4 in the first year of its inclusion in the Index demonstrates that these requests were well-founded.

Although 4K / UHD is still in its early phases of deployment, many in the industry see it as the next major driver of infrastructure upgrades – similar to the transition to HD a decade ago.

While there is no doubt that 4K / UHD is a very important developments, we are skeptical that it will have the same impact on the industry as the transition to HDTV operations, which drove a massive wave of technology spending that lasted more than a decade.

Although episodic and documentary content has or will soon move to 4K/UHD acquisition and archive (because it extends the useful life of content assets), it will take time for 4K/UHD to move into mainstream live production environments such as news and sports.  One reason for this is that it is still complex and expensive to create an entire live event in 4K/UHD, compared to today’s HD broadcast.  Uncompressed 4K/UHD requires real-time processing at 12 Gbps, and the full production chain is not yet widely available.  Another critical issue is that most 4K/UHD capable cameras utilize large format single sensors and cine-style PL-mount lenses. While the shallow depth-of-field produced by these acquisition systems is a perfect match for theatrical or drama production, it causes problems in live sports production, where depth-of-field is important to keep critical action sequences in constant focus.

Nevertheless, there’s no doubt that 4K/UHD is driving strong interest and excitement in the industry.  However, it remains to be seen whether it will become a mainstream technology driver as HD has been, or whether it will go the way of 3D production, which caused huge excitement in 2010 before being relegated to near-non-existence just a few years later.

Cloud computing / cloud based services,” is the #5 ranked trend (maintaining the same position as in 2013).

It seems that you can’t read anything about technology these days (broadcast or otherwise) without coming across some mention of “the cloud.”  So why is something that is apparently so important to so many people not ranked higher?

For the past several years, it was apparent that there was not a clear understanding of how cloud technology would be deployed in the broadcast environment, and what benefits it would bring.  This is still the case in many quarters in 2014, but this year our research shows that while there continues to be skepticism about the cloud (not to mention security concerns), the acceptance of (or at least the willingness to consider) cloud technology and services increased rapidly in 2014.

Indeed the Devoncroft 2014 BBS Global Market Report shows that Cloud Services / Cloud Technology is one of the fastest growing areas of project spending in the broadcast industry in 2014. This (paid) report also includes information about what technologies end-users are planning to deploy in the cloud, when they are planning to deploy them, and what efficiencies they hope to achieve by doing so.

For example, data from the Devoncroft 2014 BBS Global Market Report shows that Cloud Services / Cloud Technology has become one of the fastest growing areas of project spending in the broadcast industry this year.

Significantly more information about the attitudes of broadcast technology buyers towards cloud technology, and what broadcast technology buyers are likely to actually deploy in the cloud is available from Devoncroft Partners.

The #6 ranked trend in the 2014 BBS Broadcast Industry Global Trend Index is the “Transition to HDTV Operations.

The transition to HDTV has been a huge driver of broadcast technology spending for more than a decade, but 2014 BBS respondents report that it is declining in terms of future commercial importance to their organizations.  In 2014, the technology required for the transition to HDTV is well understood by the majority of the market, even those who have not yet made the transition.

Despite its gradual decline in the 2014 BBS Broadcast Industry Global Trend Index rankings, we believe that the HD transition will continue to be one of the most important industry drivers over the coming years. There are a number of reasons for this, but the most important is that there is still a long way to go in the HD transition on a global basis. Indeed, our research shows that 2014 is the first year that the total penetration of HDTV infrastructure has surpassed the 50% market for the global market.

Nevertheless, with the transition to HD having been a critically important driver for so many years, it begs the question of what’s next — as broadcast technology end-users in developed markets approach the completion of their HD transition, where does their focus (and spending) shift?

A review of the 2014 BBS Broadcast Industry Global Trend Index seems to indicate the answer lies in products and services that facilitate increased operational efficiency, and new revenue streams.

“Improvements in compression efficiency,” which is ranked #7 in the 2014 BBS Broadcast Industry Global Trend Index is consistent with the desire for increased efficiency. With content distribution models having migrated from single linear broadcast channels, to multi-channel Pay TV playout, to a totally on-demand environment, high quality compression is a critical success factor for broadcasters and content playout platforms.

A plethora of new channels, and the desire for simultaneous bandwidth saving and increased image quality for MPCD services have driven an increasing focus on high quality compression systems. For the past several years this has resulted in better MPEG-2 and H.264 compression products for primary distribution, contribution, and redistribution to consumers. H.265, aka HEVC compression technology holds the promise of further reducing the bandwidth required to deliver high quality images, particularly for 4K/UHD channels.  However, it’s still early days for HEVC, and widespread deployments are still a year or two away.  Nevertheless, it’s clear that for many end-users of broadcast technology, HEVC could be a game-changer.

In addition to creating greater efficiencies, end-users are also looking for ways to increase their revenue in an environment where the economic model of the industry is changing dramatically.  Thus “video-on-demand,” which is ranked #8 in the 2014 BBS Broadcast Industry Global Trend Index, will continue to be a strong driver for content owners, media companies and broadcasters.  The combination of MPCD, better compression technology, and an ever-increasing channel count, will continue to push video on demand deployment, whether via traditional broadcast and pay TV platforms, or over the internet or mobile networks.

The “move to automated workflows” is ranked #9 in the 2014 BBS Broadcast Industry Global Trend Index

Better compression technology and lower cost integrated playout platforms (aka “channel-in-a-box”), will facilitate an ongoing proliferation of new TV channels.  This will in turn drive a focus on bringing highly automated operations to channel playout and master control environments. Thus we expect to continue to see a strong interest in the “move to automated workflows” over the next several years.  Automated workflows are also seen as drivers of efficiency.

While efficiency is undoubtedly very important to end-users, actually making money through the monetization of the new automated channels that are coming on-line has driven a significant increase in focus on content monetization via “targeted advertising,” which is ranked #10 in the 2014 BBS Broadcast Industry Global Trend Index.

“Remote production,” which is ranked #11 in 2014 BBS Broadcast Industry Global Trend Index is another trend that is all about efficiency.  Through the use of remote production, broadcasters can lower their costs of producing live events, whether they are as small as a local soccer match or as large as the World Cup.

Similarly, broadcasters and media companies can achieve enormous cost-savings through the trend ranked #12 in the 2014 BBS Broadcast Industry Global Trend Index, “centralizing operations,” including playout and transmission

Although it’s towards the bottom of the rankings at #13, “analog switch-off” is very important for those regions where it’s happening today – primarily as mandated by local governments.  Our research shows that analog switch-off (also called “digital switch-over” in some territories) has driven huge waves of CapEx in those markets where it has already occurred.

As with previous years, the following trends were ranked towards the low-end of the Index: “transition to 3Gbps operations”, “transition to 5.1 channel audio”, “outsourced operations”, “3D TV” and “green initiatives.

.

.

The information in this article is based on select findings from the 2014 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2014 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry. The BBS is published annually by Devoncroft Partners.

Granular analysis of these results is available as part of various paid-for reports based on the 2014 BBS data set. For more information about this report, please contact Devoncroft Partners

.

.

Related Content

2014 Big Broadcast Survey (BBS) Reports Now Available

2014 Broadcast Industry Market Research from Devoncroft Partners

Devoncroft Research: IBC 2014: Observations and Analysis of Broadcast and Media Technology Industry (free 52 page report, registration required)

The 2013 BBS Broadcast Industry Global Trend Index

The 2012 BBS Broadcast Industry Global Trend Index

The 2011 BBS Broadcast Industry Global Trend Index

The 2010 BBS Broadcast Industry Global Trend Index

The 2009 BBS Broadcast Industry Global Trend Index

 

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

Broadcast Vendor M&A: DTS Acquires Manzanita Systems

Broadcast Vendor M&A | Posted by Joe Zaller
Sep 22 2014

Audio technology specialist, DTS Inc. has acquired Manzanita Systems, a provider of MPEG software solutions for digital television, video on demand (VOD), and over-the-top (OTT) markets.  Terms of the deal were not disclosed.

Manzanita is best known in the video technology sector for its transport stream analyzers and software multiplexer solutions.  Manzanita’s technology is integrated into the solutions of several technology vendors, especially those involved in the transcoding and distribution of video content.

This is DTS’s first acquisition since its purchase of SRS Labs in July 2012. The addition of Manzanita’s video technology portfolio is an interesting move for DTS and may suggest a greater expansion into the video sector as a complement to DTS’s position in the audio sector.

“We are committed to growing our business in the network-connected media ecosystem and believe that the acquisition of Manzanita Systems will help DTS further strengthen its position in the space,” said Geir Skaaden, SVP Digital Content and Media Solutions at DTS.

Consistent with the seller rationale for many M&A transactions, Manzanita will now have access to significantly more resources as part of DTS.  According to Manzanita’s founder and CEO Greg Vines “joining DTS allows us to take advantage of its much larger platform and scale to further develop our product portfolio and offer customers even greater value.”

.

.

Related Content:

Press Release: DTS Acquires Manzanita Systems

DTS Reports Strong Q2 2014 Results; Revenue Growth of 33% Year-over-Year

More Broadcast Vendor M&A: DTS to Acquire SRS Labs for $148 Million

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

Broadcast Vendor M&A: Oracle to Acquire Front Porch Digital

Broadcast Vendor M&A | Posted by Joe Zaller
Sep 14 2014

Oracle announced that it has signed an agreement to acquire library and archive management provider Front Porch Digital.

Terms of the deal were not disclosed.

According to Oracle, Front Porch Digital’s management team and employees are expected to join Oracle and continue in their current capacity

On the face of it, this is a deal that makes sense. Thanks to the widespread use of digital acquisition technology, the industry has seen huge growth in the amount of digital content being created, with shooting ratios expanding to up to 200:1 At the same time content owners are increasingly looking to find additional value in their media assets, and must find a way to efficiently manage and monetize them, either on-premise or in the cloud.

Oracle’s media and entertainment storage platforms come primarily through the its acquisition of Sun Microsystems in 2010.  Sun had previously acquired LTO library provider StorageTek.  After acquiring Sun, Oracle put renewed emphasis on its media storage products, just as digital content creation exploded, and archive management became an increasingly important requirement.

By combining Oracle’s disk-based and LTO storage platforms, with FPD’s storage management solutions, Oracle now has the capability to sell both the storage hardware and the crucial software management layer that supports it, and do so at scale.

 

Oracle buys FPD -- benefits of combination

 

Oracle says the acquisition of Front Porch Digital “will create a comprehensive, high-performance cloud or on-premise digital content storage management solution that empowers customers to modernize and simplify content management, increase efficiencies, optimize resources, and increase their bottom line.

Of course this combination also raises competitive issues, since Front Porch Digital’s partner ecosystem includes a wide variety of other storage vendors, who may in future shy away from working with a management platform owned by a competitor.

To counter this issue, Oracle says it “is committed to maintaining Front Porch Digital’s open integration platform with third-party systems and applications, and plans to further augment Front Porch Digital solutions with Oracle technologies to deliver enhanced features and functionalities.”

“Organizations need a modern, integrated content storage management solution to manage and monetize their valuable rich media assets,” said John Fowler, Executive Vice President of Oracle Systems. “We will continue to build on Front Porch Digital’s success and unique capabilities, which complement Oracle’s existing high performance and scalable engineered storage solutions.”

“Front Porch Digital has developed industry leading solutions that help companies manage large-scale digital content,” said Mike Knaisch, CEO, Front Porch Digital. “We are thrilled to be joining Oracle to continue our long-standing partnership. This combination will enable us to better serve and support our customers at a global scale.”

The proposed transaction is subject to customary closing conditions. Until the transaction closes, each company will continue to operate independently, and it is business as usual.

.

.

 

Related Content:

Press Release: Oracle Buys Front Porch Digital

Oracle Acquires Front Porch Digital — General Presentation

Oracle Buys Front Porch Digital — FAQ

Customer and Partner Letter | Oracle and Front Porch Digital

.

.

© Devoncroft Partners 2009 – 2014.  All Rights Reserved.

.

.

Avid Releases First Financial Results in Nearly Two Years, Revenue Down 11.4 Percent in 2013

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Sep 12 2014

Avid released financial results for the first time in nearly two years, following a protracted audit of it historic accounting treatment of software upgrades, dating back to 2009, which were made available to certain of its customers at no-charge.

The company has now completed the audit, and released financial results for both 2012 and 2013.  Avid has also released re-stated results for 2009-2011, which reflect the results of the audit.

For the full year 2013, Avid’s revenue was $563.4m, down 11.4% versus the previous year.

GAAP net income for the full year 2013 was $21.2m, down sharply from $92.9m in 2012. Non-GAAP income from continuing operations was $57.2 million or $1.46 per share. The company attributed the decline in revenue and net income to the larger portion of revenue from periods prior to 2011 being amortized in 2012 as compared to 2013 due changes in accounting rules.

The results for 2012 and 2013 are shown below, along with re-stated results from 2009-2011.

 

Avid restated earnings

 

“As a result of our restatement and in accordance with GAAP, revenue that had originally been recognized in earlier periods is now being recognized ratably over an extended timeframe,” said Avid EVP and CFO John Frederick. “The amount of revenue earned or to be earned over the entire period of recognition essentially remains unchanged from the amount we historically recognized. There was no change to the cash characteristics of the transactions being restated nor to the Company’s liquidity directly relating to these transactions. As a result of the restatement, the balance sheet reflects a significant increase in deferred revenue, which will be recognized in revenue over a number of years and will provide significant visibility into our future revenues. The revenue recognized from deferred revenue originating in periods prior to 2011 will continue in declining amounts through 2016, creating downward pressure on revenue growth until 2017.”

“We have worked diligently for well over a year on the restatement and are delighted to have completed the process,” said Louis Hernandez, Jr., president and CEO of Avid. “Throughout this period, we have put a premium on maintaining our focus on continued innovation for our customers and reasserting our commitment to being a strategic leader for the media industry with our Avid Everywhere vision. I’m encouraged by the progress we’ve made in executing against our three phase transformational strategy, and specifically with the growth in bookings over the past few quarters. Now that we have completed the restatement process, we are excited to continue our work on the transformation and feel the momentum building.”

Following the filing of Avid’s first quarter 2014 financial report, Avid plans to apply for relisting on the NASDAQ stock exchange, and hopes to be relisted on the NASDAQ stock exchange sometime after becoming current with its SEC reporting obligations. In the interim, Avid stock will continue to trade on OTC Markets — OTC Pink Tier under the trading symbol AVID.

.

.

Related Content:

Avid 2013 10-K Filing

Avid Nears Completion of Accounting Audit, Says Normal Financial Reporting Cycle to Resume in Q3 2014

Avid to be Delisted from NASDAQ on February 25, 2014

Avid Receives Anticipated NASDAQ Delist Letter

New Avid Rights Agreement Will Cause “Substantial Dilution” to Potential Acquirers

Avid Unlikely to Regain Compliance with NASDAQ Listing Requirements by March 2014 Deadline

Avid Technology and Computershare Trust Company as Rights Agent, Rights Agreement Dated as of January 6, 2014

Avid Receives Additional Notice of Potential NASDAQ Delisting

Avid Delays Filing of Q2 2013 Financial Results and Form 10-Q

New Avid Bonus Plan Contemplates “Reorganization Event”

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

Avid Delays Release of Q4 and Full Year 2012 Results, Shares Fall

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

 

 

 

Broadcast Vendor M&A: TSL to Merge with IPE

Broadcast Vendor M&A | Posted by Joe Zaller
Sep 12 2014

Two UK-based broadcast systems integrators, TSL and IPE, announced that they intend to merge. Terms of the deal were not disclosed.

The proposed merger is being done at the holding companies level, and includes both the systems integration and product businesses of each firm.

When the deal closes, IPE’s Colin Judge will become Managing Director of the systems company.

Chris Exelby will become Managing Director of the products company, which will include IPE’s IDS line of Integrated Display Systems to the TSL Products’ portfolio of broadcast equipment.

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

 

%d bloggers like this: