Broadcast Vendor M&A: ARRIS Buys Pace for $2.1 Billion

Analysis, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Apr 22 2015

In the latest round of media technology consolidation ARRIS announced  it will acquire Pace for $2.1 billion in stock and cash.

ARRIS is financing the deal with just $55 million in cash.  The remaining $2.05 billion comes from a new incremental $800m credit facility underwritten by Bank of America Merrill Lynch, and $1.455 billion worth of newly issued ARRIS shares.

The transaction will result in the formation of “New ARRIS,” which is expected to be listed on the NASDAQ stock exchange under the ticker ARRIS.

Full details of the transaction are available in the Agreement and Plan of Merger file with the SEC.

In a presentation to investors, ARRIS provided the following graphical description of the post-closing structure of New ARRIS:

ARRIS Acquires Pace -- New Arris Post-Closing Structure

 

The deal comes just over two years since ARRIS paid $2.2 billion to acquire the Motorola Home business from Google and catapulted itself to global leader status in the process.

According to the company, the deal “significantly enhances ARRIS international presence, provides large scale entry into satellite segment, [and a] broader product portfolio in equipment, software and services.”

In a letter to employees, ARRIS chairman & CEO said the acquisition of Pace “opens the door for ARRIS’s next phase of growth – through a broader geographic and customer footprint, newly combined complementary product offerings, and enhanced scale. It will provide us with a large-scale entry into the satellite segment. By adding Pace’s innovation and talent, we can further broaden our product portfolio in equipment, software, and services. We will also benefit from Pace’s strong presence in Latin America – one of our industry’s highest growth regions – opening up new global opportunities.”

ARRIS described the Pace product portfolio in the chart below:

ARRIS Acquires Pace -- Pace Product Portfolio

 

The acquisition of Pace gives ARRIS a stronger position in the set-top box business, at the same time as Cisco is being urged by investors to exit from its set-top box unit.  For the first six months if its 2015 fiscal year, revenue in Cisco’s “Service Provider Video” business, which includes STBs decreased by more than 15% versus the same period last year.

“This transaction is another example of ARRIS’s ongoing strategy of investing in the right opportunities to position our company for growth. Adding Pace’s talent, products and diverse customer base will provide ARRIS with a large scale entry into the satellite segment, broaden our portfolio and expand our global presence. We expect this merger will enable ARRIS to increase its speed of innovation. We believe this is a tremendous opportunity for ARRIS and our customers, employees, shareholders and partners around the world as we collaborate to invent the future,” said  Stanzione.

“Pace plc is a great company with a strong track record of pioneering innovation and excellent customer service. Through a combination of organic development and acquisitions, Pace has grown to be a leading technology solutions provider to the PayTV and Broadband industries serving cable, satellite and telco customers across the globe. Over the last three years, Mike Pulli and the wider Pace team have successfully executed against our strategic plan to develop Pace into a more distinctive, profitable and cash generative company, creating significant value for shareholders.

“The Pace Directors believe that ARRIS’s offer recognises this value and also gives our shareholders the opportunity to share in the future success of the combined group. While we believe that Pace is strongly positioned to continue to execute its strategy in the medium and long term, we believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential. We believe this is a great fit for both companies, our employees, customers and trading partners,” said Allan Leighton, Chairman of Pace.

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Related Content:

Press Release: ARRIS to Acquire Pace plc for $2.1 Billion in Stock and Cash

ARRIS-PACE AGREEMENT AND PLAN OF MERGER

Investor Presentation — ARRIS TO ACQUIRE PACE PLC

ARRIS Employee Letter

Arris-Pace Merger Credit Agreement

Reuters: Arris to buy British set-top box maker Pace in $2.1 billion deal

Reuters — Analysis: Some Cisco investors urge an exit from set-top box unit

Press Release: ARRIS Acquires Motorola Home: Creates Premier Video Delivery and Broadband Technology Company

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Did NAB 2015 Change Your Opinions About the Broadcast and Media Technology Industry?

Analysis, broadcast industry technology trends, broadcast industry trends | Posted by Joe Zaller
Apr 22 2015

Depending on your perspective, the 2015 NAB Show may be remembered as a pivotal moment in the evolution of the media technology industry.BBS Logo

Whether you travelled to Las Vegas for the 2015 NAB Show or read about it in the trade press, it’s hard to disagree that the pace of change in the industry is accelerating rapidly.

There were a huge number announcements before and during the NAB Show. If you’re like us, you may be reviewing them in an attempt to separate hype from reality, while working to distill what you’ve seen and heard into an actionable strategy that moves your business forward.

 

Share your opinions on broadcast & media technology

Coming out of NAB 2015, you probably have a lot of opinions about trends, technology deployments, or the products and brands of media industry vendors; and we’d like to hear them.

You can share your thoughts by participating in Devoncroft’s 2015 Big Broadcast Survey (BBS), the largest and most comprehensive annual study of the broadcast and media technology industry.

 

Click here to register for the 2015 Big Broadcast Survey.

 

Once you complete the short registration process (necessary in an age of web-crawling spam bots), we’ll send you a link to participate in the 2015 BBS.

When you complete the 2015 BBS (which should take about 20 minutes), we’ll send you a recently published 60 page analysis of the media technology industry, including a snapshot of some of the most important trends and announcements from the 2015 NAB Show.

 

There are a million surveys… Why bother with this one?

In an age when cheap web-based tools allow anyone with $20 to do an online survey, the Big Broadcast Survey stands the test of time as a critical tool for media technology strategists.

The BBS takes a scientific approach that provides independent third-party validation a wide range of important topics. It allows both buyers and suppliers of media technology to benchmark themselves against their peers on a global basis.

That’s why technology vendors, broadcasters, service providers, and finance professionals rely on the BBS as one of the most important reference tools for the media technology industry.

That’s why there was a standing-room only crowd last week in Las Vegas when we shared some of the insights from the BBS as part of the fourth annual “Shifting Media Economics: Impact on Strategy, Finance, and Technology” event, which is now part of the NAB Show’s 2015 Media Finance and Investor Conference track.

Devoncroft 2015 NAB Show View of Crowd from PodiumView from the podium at during a break in the action at “Shifting Media Economics: Impact on Strategy, Finance, and Technology” at the 2015 NAB Show… due to the large crowd, the back wall had a be removed

 

 

We know your time is valuable, so when you complete the 2015 Big Broadcast Survey will receive:

  • A newly published 60 page analysis of the media technology industry, including a snapshot of some of the most important trends and announcements from the 2015 NAB Show

 

  • An 85-page summary of Devoncroft’s most recent global study of the market (as soon as you complete the survey)

 

  • A 50+ page summary of the 2015 survey results, as soon as it is available

 

  • One or more entries into a random drawing for a chance to win 1 of 5 prizes (Your choice of a DJI Phantom Aerial UAV Drone Quadcopter and GoPro HERO4 BLACK; OR iPad Air 2 Wi-Fi 128GB; OR US$750Marriott/ Ritz Carlton worldwide hotel voucher)

 

  • The opportunity to receive on going market intelligence about the latest industry trends and technologies from Devoncroft Partners

 

Click here to register for the 2015 Big Broadcast Survey.

 

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Industry Thought Leaders to Discuss “Shifting Media Economics: Impact on Strategy, Finance, and Technology” at 2015 NAB Show

Analysis, broadcast industry technology trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A, Conference Sessions, Online Video, OTT Video | Posted by Joe Zaller
Apr 09 2015

Whether you are a supplier, buyer, or investor in the media technology sector, you won’t want to miss the fourth annual NAB Show event co-produced by Devoncroft Partners and the organizers of the NAB Show.

 

NAB Devoncroft 2015 Shifting Media Economics Session Announcement

 

Now part of the NAB 2015 Media Finance and Investor Conference, “Shifting Media Economics: Impact on Strategy, Finance, and Technology,” will be held on Sunday April 12, 2015 in room N235 of the Las Vegas Convention Center.

Designed to be a thought-provoking kickoff to the 2015 NAB Show, this half-day conference examines the “the business of the media business” from the perspective of all levels of the media value chain. It includes panel discussions featuring C-level executives from leading broadcasters, service providers, technology vendors, and private equity investors. Each group will offer a candid assessment of how their respective business models, operational practices, and strategic decision making have been impacted by the dramatic shift in media industry economics.

The keynote, “The Future of TV. One Man’s Opinion.” will be delivered by Bob Bowman, President, Business & Media of Major League Baseball (MLB), who oversees MLB Advanced Media (MLBAM) and MLB Network.

MLBAM has been involved with several recent high-profile streaming events including WrestleMania 31, the opening day of Major League Baseball, the NCAA March Madness basketball tournament, and the recent launch of HBO Now.  Bowman is scheduled to take the stage just one hour before the highly anticipated season 5 premiere of “Game of Thrones” becomes available via HBO Now.

The conference will also include presentations of the latest market research on industry trends and financial performance.  This includes preliminary excerpts from the Devoncroft Big Broadcast Survey, the industry’s definitive demand-side study of the broadcast and digital media industry; and the 2015 IABM DC Global Market Valuation Report, the industry’s definitive supply-side market sizing report.

In advance of the NAB Show, Devoncroft Partners has published an analysis of the trends and strategic drivers in the broadcast and media technology sector. This report is available to download here (registration required).

This conference is intended for senior executives from technology vendors, end-users, and investment firms in the media technology sector. It provides an excellent opportunity to network with industry executives and the financial community ahead of NAB show commitments.

Approximately 400 executives attended this standing-room only event in 2014. We hope to see you there on Sunday April 12, 2015.

Please note that because this event is part the 2015 NAB Show Media, Finance and Investor Conference, registration is required.

 

An overview of the conference is included below.  Full details are available on the NAB Show website.

 

Shifting Media Economics: Impact on Strategy, Finance, and Technology

 

1:40pm – Welcome and Introductions

Presenter:

  • Peter White, CEO IABM

 

 

1:50pm – Review of Market Developments

Josh Stinehour of Devoncroft will take the podium for his annual (enthusiastic) presentation on developments in the media technology sector.  If you have any final announcements you would like Josh to consider for his presentation, let him know.

Presenter:

  • Joshua Stinehour, Principal Analyst Devoncroft Partners

 

 

2:15pm – The Broadcast & Media Technology Industry in 2015

Devoncroft founder Joe Zaller will present a data-driven overview of the forces bringing dynamic change to the media technology sector in 2015. This will include preliminary results of the 2015 Big Broadcast Survey, the industry’s most comprehensive demand-side study, and observations from the 2015 IABM DC Global Market Valuation Report, the industry’s definitive supply-side market sizing report.

Presenter:

  • Joe Zaller, President Devoncroft Partners

 

 

2:40pm – Business Strategy Perspectives from Industry Executives

CEOs from four of the media and broadcast industry’s largest technology suppliers will debate the most important commercial issues facing the industry, and discuss their strategies to position their companies for success in a rapidly evolving marketplace.  The panelists will also offer opinions on how changes in the business environment are impacting vendors and customers.

Moderator:

  • Joe Zaller, President Devoncroft Partners

 

Panelists:

  • Patrick Harshman: President and Chief Executive Officer, Harmonic, Inc.
  • John Stroup: President, Chief Executive Officer, Belden, Inc.
  • Tim Thorsteinson: Chief Executive Officer, Quantel and Snell
  • Charlie Vogt: Chief Executive Officer, Imagine Communications

 

 

3:20pm – The Broadcast Buyer Perspective on Industry Trends

Senior technology executives from four leading broadcasters will offer informed perspectives on the most significant industry trends affecting technology budgets and the technology purchase decision.  The audience will benefit from an emphasis on the business implications of technology decisions to broadcasters.

Moderator:

  • Joe Zaller, President Devoncroft Partners

 

Panelists:

  • Ken Brady: SVP Media Technology and Operations, Turner Broadcasting Systems
  • Richard Friedel: EVP & General Manager, Fox NE&O
  • Fred Mattocks: GM Media Operations & Technology, Canadian Broadcasting Corporation
  • Bob Ross: SVP East Coast Operations, CBS Broadcasting, Inc.

 

 

4:00pm – The Service Provider Perspective on Industry Trends

A panel of executives from leading media service providers will discuss views on both technology developments and deployment considerations for media organizations.  Discussion topics will include solutions for multi-platform content delivery, the economics of outsourcing, how service providers can leverage their scale to deliver increased performance and agility, and how next-generation data center architecture may impact the media ecosystem.

Moderator:

  • Joe Zaller, President Devoncroft Partners

 

Panelists:

  • Darcy Antonellis: Chief Executive Officer, Vubiquity
  • Anil Jain: SVP & GM Media Group, Brightcove, Inc.
  • Steve Plunkett: Chief Technology Officer, Ericsson Broadcast & Media Services

 

  

4:30pm – The Institutional Investor Perspective on Industry Trends

A panel of leading investment professionals in the media and entertainment sector will offer the audience the institutional investor’s perspective on the industry. The discussion will include the panelists’ intelligence-gathering plans for the NAB Show, views on the trends that are driving investment dollars in the sector, and a review of the characteristics influencing the evaluation of an investment opportunity in the media technology industry.

Moderator:

  • Joshua Stinehour, Principal Analyst Devoncroft Partners

 

Panelists:

  • Chris Kanaley: Vice President, Parallax Capital
  • Nick Lukens: Vice President, Vector Capital
  • Bryce Winkle: Vice President, The Gores Group

 

5:00pm – Keynote: The Future of TV. One Man’s Opinion.


Presenter:

  • Bob Bowman, CEO MLB Advanced Media

 

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Download New Devoncroft Partners Report: NAB 2015 – Observations and Analysis of the Media Technology Industry

broadcast technology market research | Posted by Joe Zaller
Apr 09 2015

In advance of the 2015 NAB Show, Devoncroft Partners has published an analysis of the trends and strategic drivers in the broadcast and media technology sector.

A link to download this report can be found at the bottom of this page.

 

Devoncroft Partners - 2015 NAB Show Strategic Analysis

 

The report covers and provides commentary on a variety of significant market trends, drivers, and events, including:

  • Market dynamics: step-change in media technology growth, and ongoing value shift

 

  • Financial performance of selected industry vendors

 

  • Consolidation, investor activity, M&A – end-users, service providers, and vendors

 

  • Fierce competition in media, and the opportunity for value creation

 

  • Digital Disruption – this time it’s for real, and the implications extend far beyond the obvious

 

  • Transition of traditional revenue models to new platforms

 

  • Uncertainty about the future of technology deployments

 

  • Fundamental implications to technology vendors, service providers

 

  • Business, technical transitions facing vendors, service providers

 

  • Thoughts on the future

 

Included in the analysis are preliminary excerpts from the 2015 Big Broadcast Survey (BBS), the largest and most comprehensive study of technology trends, buyer behavior, and vendor brands in the broadcast and media technology sector.

We welcome feedback, comments, and questions on this report.

If you would like to schedule a meeting at the NAB Show, please let us know as soon as possible.  We are in the process of finalizing the NAB Show schedule for the Devoncroft team, and have limited availability remaining.

We hope to see you in Las Vegas.

 

Please click here to download a PDF copy (6 MB) NAB Show 2015 – Observations and Analysis of the Media Technology Industry from Devoncroft Partners (registration required).

 

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Report: Apple Planning Online Video Launch Featuring 25 Broadcast Channels

Online Video, OTT Video | Posted by Joe Zaller
Mar 17 2015

silver-apple-logo

Just a week after the announcement that Apple will be the exclusive launch partner for the HBO Now streaming service, a Wall Street Journal article reports the company is planning to introduce an online TV service featuring up to 25 broadcast channels, including content from ABC, CBS, and Fox.

The WSJ reports that media executives they interviewed believe Apple in planning to charge $30 to $40 per month for the service, which it aims to announce in June and launch in September.

This is not the first time there have been rumors about the launch of an Apple TV service. In 2012 Jefferies & Co. analyst James Kisner said in a report that his industry contacts suggest that “at least one major North American cable system operator is working to estimate how much additional capacity may be needed for a new Apple device on their broadband data network.”

Last year the WSJ reported: “Apple was in talks with Comcast to team up on a streaming TV service that would use an Apple set-top box and get special treatment on Comcast’s cable pipes to bypass congestion on the Web. Apple had discussions since at least mid-2012 with Time Warner Cable, but those talks came to a standstill when the company became a takeover target for rival operators. Time Warner Cable struck a deal—still awaiting regulatory approval—in February 2014 to sell itself to Comcast.”

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Related Content:

WSJ Article: Apple Plans Web TV Service in Fall

HBO Reportedly Planning April 2015 Streaming Launch, Will Charge $15 per Month

Intel, Apple and Others Rethink How We Watch TV – WSJ.com

Analyst Says Apple TV Launch “Imminent,” Could Benefit Arris

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Strong Sales in Americas Drives Orad Revenue 27 Percent Higher in 2014

Annual Results, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Mar 10 2015

orad_Logo

Graphics and media asset management (MAM) provider Orad reported that its revenue for the fourth quarter of 2014 was $10.6m, an increase of 21.7% versus the same period a year ago, and up 1% versus the previous quarter.

Product revenue in Q4 2014 was $8.2m, or 78% of total revenue, an increase of 53.4% versus the 4th quarter of last year when product sales were $5.4m, or 61.9% of total revenue.

Service revenue in Q4 2014 was $2.3m, or 22% of total revenue, a decline of 29.7% versus the 4th quarter of last year when service revenues were $3.3m, or 38.1% of total revenue.

Net income for the quarter was $1.1m versus a net profit of $200,000 during the same period a year ago, and a net profit of $800,000 last quarter.

Gross margins for the quarter were 69.9%, versus 68.6% last year, and 71.1% last quarter.

Operating income for the quarter was $900,000, versus an operating loss of $1.5m during the second quarter of 2013, and operating income of $800,000 last quarter.

Cash, cash equivalents and restricted cash at the end of  December 2014 were $10.4m, compared to $9.1m at the end of September 2014, and compared to $5.7m at the end of December 2013.

 

Full Year 2014 Results

For the full year 2014, Orad’s revenue was $40.5m, up 27.3% versus 2013.

Revenue from Europe was $19.2m, up 38.2% versus 2013.  Europe accounted for 47.3% of total 2014 revenue.  In 2013, revenue from Europe was $13.86m, or 43.6% of total revenue.

Revenue from Asia was $6.5m, a decline of 5.7% versus 2013.  Asia accounted for 16% of total 2014 revenue.  In 2013, revenue from Asia was $6.9m, or 21.6% of total revenue.

Revenue from the Americas was $14.3m, an increase of 44.5% versus 2013. The Americas accounted for 35.3% of total 2014 revenue.  In 2013, revenue from the Americas was $9.9m, or 31.1% of total revenue.

Product sales for year were $31.3m, an increase of 31.5% versus 2013.  Product sales accounted for 77.2% of total revenue in 2014, up from 74.8% in 2013.

Service revenue for 2014 was $9.2m, up 14.9% versus 2013. Service revenue accounted for 22.8% of total revenue in 2014, compared to 25,2% in 2013.

Operating income for 2014 was $4.36m, compared to a loss of $1.6m in 2013.

Net income for 2014 was $3.4m, compared to a net loss of $1.9m in 2013.

Gross Margins for 2014 were 69.7% up from 66.6% in 2013.

Operating expenses for the year were up across the board.

R&D expenses for 2014 were $6.1m, up 3.5% versus 2013. R&D expenses accounted for 15.1% of total revenue in 2014, compared to 18.6% of total revenue in 2013

Sales & marketing expenses for 2014 were $13.8m, up 4.5% versus 2013. Sales & marketing &D expenses accounted for 34.2% of total revenue in 2014, compared to 41.6% of total revenue in 2013

G&A expenses for 2014 were $3.9m, up 9.7% versus 2013. G&A &D expenses accounted for 9.7% of total revenue in 2014, compared to 11.4% of total revenue in 2013

“We are pleased to announce that 2014 has been our most successful year in many aspects,” said Orad CEO Avi Sharir. “Profits have continued to increase, reaching the highest level in the company’s history. Our operating income for 2014 was 10.8% from revenues, far better than our outlook of 8%-10%. We have succeeded in meeting these impressive results thanks to our strong increase in revenues resulting from our wide range of products and solutions, our extensive geographic presence and as a result of our increased efficiency. Our strategy to offer customers comprehensive solutions was very successful with several very significant sales. Orad’s solutions’ offering brings added value to the customer by simplifying his workflow, while offering a one stop shop for the entire solution. Our servers took the forefront this year, penetrating new markets. We are seeing increased interest from existing and new customers, and given the size of the potential market, we are aiming to increase our market share. Our strategy to strengthen our presence in the North American market in 2014 proved successful, doubling our bookings compared to 2013.

 

Outlook:

“I am confident that Orad will continue in 2015 in the same direction as we continue to invest in cutting edge new technologies and increase our presence in existing and new markets,” said Sharir.

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Related Links:

Press Release: Orad Reports Financial Results for the Fourth Quarter and for the for the Full Year of 2014

Orad’s Revenue Jumps 40.7 Percent in Q2 2014

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Avid and Adobe Integrate Editing and Storage Systems

broadcast technology market research | Posted by Joe Zaller
Mar 10 2015

Adobe_LogoAvid Logo_ white  backgroundSince launching its Media Central platform last year, Avid been telling the industry that they are the “most open” company in the media technology space.

Today Avid went a long way towards putting its money where its mouth is, by announcing that its ISIS high-performance shared storage systems now fully support Adobe’s Premier Pro CC editing platform.

According to the two companies Adobe has made enhancements to Premiere Pro CC that “significantly improve its performance when connected to Avid ISIS® | 7500 and ISIS | 5500 shared storage systems.”

Adobe and Avid have also enabled interoperability between their editing systems, meaning “it’s now possible to mix Avid Media Composer and Adobe Premiere Pro CC on the same ISIS system in the same storage group, without worrying about complex configuration issues or performance compatibility.”  The collaboration also enables users to “edit higher resolution projects using Premiere Pro CC on ISIS shared storage more efficiently and cost effectively than ever before.”

Avid said the collaboration between the two companies is “unprecedented,” and “delivers on the openness of Avid Everywhere, by enabling flexible and efficient workflows for all video editors and creative professionals, regardless of their choice of editing application.”

“We are pleased that Avid’s shared storage systems now provide the high performance required for Adobe solutions,” said Simon Williams, director of strategic relations at Adobe. “With this news, Adobe Premiere Pro CC and Media Composer can share Avid DNxHD or Avid DNxHR media and other open file types on the same infrastructure. Our large base of shared customers will undoubtedly realize significant workflow benefits from this collaboration.”

“One of the critical issues facing broadcasters and post-production facilities is the drag on productivity caused by having to manage and integrate different solutions from different vendors with different standards,” said Ray Gilmartin, senior director, Product and Segment Marketing, Avid. “This collaboration between Avid and Adobe is an example of the openness and flexibility that we are committed to delivering to the industry with Avid Everywhere.”

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Related Content:

Press Release: Avid and Adobe Collaborate on Integration With Shared Storage to Enhance Openness, Flexibility, and Efficiency

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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ChyronHego Taken Private by PE Firm, Delisted from NASDAQ

Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Mar 09 2015

ChyronHego LogoVector Capital has completed the previously announced $120m deal to acquire ChyronHego and take it private.

Under the terms of the deal, ChyronHego stockholders will receive $2.82 per share in cash, and ChyronHego common stock has ceased trading on the NASDAQ Stock Exchange.

According the definitive proxy statement, the purchase of ChyronHego will be funded by a combination of equity and debt financing.

Equity financing will be provided by Vector Capital and its affiliates, who have committed to pay approximately $49.3m towards the acquisition, and related expenses.

Debt financing is being provided by Silicon Valley Bank (SVB) and Apollo Investment Corporation (Apollo) in the form of a $50m senior secured five-year term loan, which is expected have interest of “either (i) the Eurodollar Base Rate plus 5.625% (subject to a 1.0% floor with respect to the Eurodollar Base Rate), or (ii) at the Adjusted Base Rate (defined as the highest of (w) 2.75% of (x) the Wall Street Journal Prime Rate and (y) the Federal Funds Rate plus 0.50%) plus 3.875%.”

Separately, SVB and Apollo have also providing a $7m senior secured revolving credit facility that has the same terms as the senior five-year term loan. ChyronHego will use the revolving credit facility for working capital and capital expenditures and other general corporate purposes.

In its last quarter as a public company (Q3 2014), ChyronHego posted a net loss of $2.6m on revenue of $14m.

During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.

For the trailing twelve months (TTM) ended September 30, 2014, ChyronHego had revenue of $58m, comprised of $27.2m of product revenue and $30.8m of service revenue.

In a securities filing, ChyronHego said it ended 2014 with approximately $5.4m in cash and equivalents; and projected that its revenue for the full year 2014 would be $59m.

“We are delighted to be working with Vector Capital,” said Johan Apel, President and Chief Executive at ChyronHego. “As a private company, ChyronHego will be ideally positioned to reinforce the company’s leadership in news, sports and live production solutions. The Vector team has a strong track record of success in acquiring and operating innovative technology companies, and our partnership with them will enable us to reach new levels of scale, technological capabilities and customer service.”

David Fishman, Managing Director at Vector Capital, who will join ChyronHego’s Board of Directors, said: “We believe that as a private company with Vector’s financial support ChyronHego will be well positioned to capitalize on the significant opportunities in broadcast graphics creation, play-out and real time data visualization. Over time, we are confident the company will be well positioned to capitalize on the exciting trends in the sports, news and live television markets.”

“We welcome ChyronHego to the Vector family,” said Nick Lukens, Vice President at Vector. “We are very excited to roll up our sleeves and get to work with the talented team at ChyronHego. Through our partnership with management, we are committed to strengthening and expanding ChyronHego’s market leading product and service capabilities.”

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Related Content:

Press Release: Vector Capital Completes Acquisition of ChyronHego

Certificate of Merger

ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

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

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

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

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Evertz Revenue Declines 3 Percent in Q3 FY 2015, Cites New Wins in Tough Market

Broadcaster Financial Results, Quarterly Results | Posted by Joe Zaller
Mar 05 2015

evertz-logo

Evertz announced that revenue for the third quarter of its 2015 fiscal year was C$90.7m, down 3% versus the same period a year ago, and up 9.5% versus the previous quarter.

Net earnings for the third quarter were C$21.2m (C$0.28 per share), down approximately 1% versus the same quarter last year, and up 47.9% versus the previous quarter.

The company generated C$27.5m cash from operations in the quarter, up from C$24.4m, last year, and C$17.5m last quarter.

The results (which were the fourth highest sales quarter in the history of the company), were in line with the consensus estimates of equity analysts.

Evertz EVP Brian Campbell said that the company’s revenue in the quarter was well-diversified, with the top 10 customers accounting for approximately 38% of sales.  The company had 72 orders of more than C$200,000 during the quarter (versus 78 last year, and 71 last quarter), and no single customer represented more than 7% (C$6.35m) of revenue.

According to Campbell, the company’s product mix profile during the quarter was “very consistent with the last few quarters,” specifically citing success with its EXE and IPX IP routing products, the DreamCatcher replay system, video compression products, and IRDs.  Campbell said that these new product families pull through traditional processing and infrastructure equipment with them.”

As evidence of this pull-through effect, Campbell highlighted how the “recent adoption of Evertz new Integrated Receiver/Decoder technology by a leading US national broadcast network customer, resulted in the purchase order of over C$10m” for Evertz IRDs, compression products, infrastructure products, and monitoring & control solutions.

Looking specifically at IP routers, Campbell said that although Evertz has not announced many wins for its EXE IP-based router (which it also calls SDVN), the company continues to have very good success with the EXE at its 46 terabit size, and has recently started to gain traction in the mobile production community with a newly introduced half-rack version of the EXE, which has a throughput capacity of 23 terabit per seconds.  Campbell added that the company currently has “in excess of 30 customers” for the EXE and IPX IP-based router products, and customer demand for these products remains “very good,” particularly with sports trucks, where the company is winning new business.

Revenue in the US/Canada region was C$53.6m, down 2.5% versus the same period a year ago, and up 18.1% versus the previous quarter. US/Canada sales were 59.1% of total revenue during the quarter, flat with the same period a year ago, and up from 54.7% of revenue last quarter. Evertz does not provide details of currency adjusted trading, but one analyst estimated that revenue in the US/Canada region was likely down 10% on a constant currency basis.

International revenue was C$37.2m, down 2.5% versus the same period a year ago, and down 1% versus the previous quarter. International sales were 41% of total revenue, flat with last year and down from C$45.2m last quarter.

Commenting on the US versus international results, Campbell said Evertz was “seeing good strength in the Canada/US region,” but internationally “there is a fair bit of geopolitical and economic instability,  so whether that’s Russian, Ukraine, parts of the Middle East or elsewhere, we are in a fairly challenging global economic market.”

Gross margins in the quarter were 56.2%, down from 57.6% last year and flat with the previous quarter. Evertz executives said that the gross margin performance in the quarter were within the company’s target range of 56% to 60%.

On the earnings call, RBC Capital analyst Steve Arthur asked why the company’s gross margins are “stubbornly at the lower end of your traditional range,” and what it will take to move gross margins “up towards the middle part of the 56 to 60 kind of range.” Evertz CFO Anthony Gridley said that gross margins in the quarter were driven by product mix, and that gross margins vary between geographies.  Gridley also said that “some of the larger scale projects can sometimes have lower margins, and this this quarter, we had some positives from currency, but they were offset by some few lower margin deals,” resulting in the 56% level.

R&D expenses in the third quarter were C$15.8m, an increase of 4.8% versus the same period last year, and up 4.3% versus the previous quarter.  R&D expenses were approximately 17.4% of revenue in the quarter, up from 16.1% last year, down from 18.2% last quarter when revenue was slightly lower.

Selling, general and administrative expenses for the quarter were C$16.4m, down 5.3% versus the same quarter last year, and essentially flat with the previous quarter. SG&A expenses represented approximately 18.1% of revenue in the quarter versus 18.6% of revenue during the same period last year, and 19.8% of revenue last quarter.

The company said that its shipments in February 2015 were C$19m, and that its purchase order backlog at the end of the third quarter of fiscal 2014 was in excess of C$65m. The combined C$84m total backlog in shipments represents a 24% year-over-year increase.

Evertz ended the quarter with C$103.3m of cash and short term investments, up from C$90.4 at the end of last quarter.

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Related Content:

Press Release: Evertz Technologies Reports Results for the Third Quarter Ended January 31, 2015

Previous Year: Evertz Q3 FY 2014 Revenue Jumps 30 Percent on Big Deals in North America

Previous Quarter: Evertz Revenue Increases 2 Percent in Q2 FY 2015, Misses Analyst Estimates

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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HBO Reportedly Planning April 2015 Streaming Launch, Will Charge $15 per Month

Online Video, OTT Video | Posted by Joe Zaller
Mar 05 2015

According to a report from Reuters, HBO is in discussions with at least five companies, including Apple, Google, and Tivo, to be launch partners for its previously announced HBO Now streaming service

Citing reports from The International Business Times and Bloomberg, Reuters notes that HBO plans to introduce the new streaming service in April 2015, and is expected to charge $15 per month.

According to Bloomberg, HBO CEO Richard Plepler has said he is looking to reach an estimated 10 million consumers who get Internet service but don’t subscribe to cable or satellite TV. Plepler has said he wants to work with HBO’s longtime cable distributors as well as new ones.

 

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Related Content:

International Business Times: HBO In Talks With Apple To Be Launch Partner For Coming Web Service ‘HBO Now’

Bloomberg: Apple, Google Said to Be in Talks With HBO to Carry Web Channel

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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