Archive for November, 2010

Pilat Media Post Q3 Profit as Revenues Increase 8.7%

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 30 2010

Broadcast business management vendor Pilat Media announced that its revenue for the third quarter of 2010 was £5.25m, an increase of 8.7% versus the same period a year ago, and down 5% from the previous quarter.

After tax profit for the quarter was £54,000 versus £574,000 during the third quarter of 2009.  The company attributed the lower profitability in the quarter to the impact of exchange rate movement and one-off set-up costs relating to new development center in Ukraine designed to lower future development costs.

Gross margins for the quarter were 52.7% compared to 50.2% during the same period a year ago.  The company says its margin improvement is due to a change in revenue mix and the beginning of the positive impact of the lower cost development centre in Kiev, and added that it expects gross margins for the full year to be higher than in 2009.

For the year to date, the company’s revenue was £15.67 million, an increase of 19.1% versus the first nine months of 2009.  After tax profit for the first nine months of the year was £398,000 versus a loss of £668,000 during the first nine months of 2009.

Pilat executives provided optimistic guidance for the fourth quarter, which it says is typically strong, and said that it expects revenue for the full year 2010 to be its highest ever.

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You can read the full Pilat Media Q3 earnings announcement here.

Pilat Media’s Q2 2010 earnings announcement is here.

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RealD Files Prospectus for $200m Secondary Stock Offering. All Proceeds Destined for Current Shareholders Rather than the Company Itself.

broadcast technology market research | Posted by Joe Zaller
Nov 29 2010

RealD, a global licensor of 3D technologies, last week filed a prospectus with the Securities and Exchange Commission to sell 7,815,001 shares of its common stock, along with an additional 1,172,250 shares as an over-allotment.  Based on today’s stock price of around $26.50, this translates to about $207m (about $238m is the overallotment shares are also sold).  

It’s always interesting to read this kind of document because it offers information about the company’s financial performance and business strategy.  RealD’s prospectus is also interesting because it provides useful data about the take-up of 3D, which is something that many in the broadcast industry are working to understand.

What’s also interesting about this deal is that apparently none of the money from the offering will go to RealD.  Instead, it will all go to current stockholders, including directors and executives.

According to the prospectus filed with the SEC “The selling stockholders, including certain members of our board of directors and management, will receive all of the proceeds from this offering, and we [the company] will not receive any proceeds from the sale of shares in this offering.”

The largest beneficiary will be Shamrock Capital Advisors, whose “Capital Growth Fund II” is selling almost 5.4 million shares of RealD, or 99.9% of its holdings in the company, as part of the offering.   

Other company insiders will benefit as well.  For example, both company chairman and CEO Michael Lewis and company president Joshua Greer are selling 10% of their holdings in the company.  Lewis and Greer stand to gain about $17m each from the offering, and almost $30m each if all the shares allocated for overallotment are sold. Company CFO Andrew Skarupa is also selling 10% of his current holdings in the company for about $2.2m.  Skarupa will make about $3.8m if all the shares allocated for overallotment are sold.

Several others affiliated with the company are also using the offering to sell “restricted stock unit awards that are exercisable within 60 days of September 24, 2010.”

It’s interesting to see so many RealD insiders selling their shares on the heels of their IPO, which was just over four months ago.  Especially when you consider a Wall Street Journal article published at that time, which said that “company insiders and investors at RealD raised more money in the company’s recent initial public offering than the company did.”

Lewis and Greer each received $17.1m in July of this year when they both sold 1.15 million shares in the company’s IPO.  Skarupa made about $2.2m from the company’s IPO.  Shamrock, who recently bought Screenvision from Technicolor and ITV, made about $34.4m when it sold 2.3 million RealD shares during the company’s IPO.

The chart below shows a breakdown of how many shares are being sold by each shareholder, along with the amount they stand to receive for these shares for both the initial and overallotment offerings.  Please note that this chart assumes a share price of $26.50 per share (the price at the time of writing).

Sellers of RealD shares (values based on a share price of $26.50.  Source RealD Form S-1 filed with SEC on 11/22/2010

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You can read the full RealD share offering prospectus here.

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More Broadcast Industry M+A: Ascent Sells Post Business to Deluxe

broadcast industry trends | Posted by Joe Zaller
Nov 25 2010

In move that further consolidates the post production industry, Deluxe Entertainment announced that it has signed an agreement to acquire the creative services and media services business of Ascent Media. 

According to Ascent Media, The deal is valued at $68m allocated as follows: 79% to the U.S. businesses and 21% to the U.K. businesses.

Deluxe say the deal, which includes the acquisition of Company 3, Beast, Method, Rushes, Encore Hollywood and Level 3 Post from Ascent, will enhance Deluxe’s include life-cycle library management and digital asset management services for clients.

Ascent Media says it will continue to own its content distribution and systems integration businesses. However, the Company is pursuing strategic alternatives for both business units. In addition, the Company is committed to pursuing investments in or the acquisition of businesses that provide enhanced shareholder return opportunities.

You can read the full Deluxe press release here.

More information from TVB Europe is here.

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Vislink Restructuring Operations. Announces M&A Program to Focus Business on IP Video for Broadcast and Public Safety Markets.

broadcast industry trends, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Nov 23 2010

Vislink a provider of technology and solutions for microwave radio, satellite transmission, wireless camera and marine CCTV, announced that it plans to restructure its operations.  The company owns several brands in the broadcast industry including Advent, Link, MRC, Pacific Microwave, and Western Technical Services.

After conducting a strategic review of its operations, Vislink said it is re-shaping itself to focus on IP based systems for the news & entertainment and law enforcement & public safety markets where “it believes it is already regarded as a market leader.”

As a result of this decision, the Vislink announced an M&A program though which it will divest certain assets and buy others in order to focus more fully on the broadcast and public safety markets.

Specifically, the company will

  • sell its marine and energy (M&E) business to Hernis Scan Systems for £32.5m
  • sell Western Technical Services (WTS) for between £2.5m – £4.5m
  • acquire Gigawave, one of its competitors in the broadcast market, for an expected £5.75m

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The company said it will use the proceeds from the sales of WTS and its M&E business to pay down debt, invest further in IP development, and make earnings enhancing acquisitions such as Gigawave.

According to a Financial Times article, Vislink CEO Duncan Lewis, said the acquisition of Gigawave will “send a signal to the market of how serious we are about news and entertainment.”

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Vislink Trading Update

The company said that its revenue increased in the third quarter by 15% versus the previous quarter of this year, but that year to date sales are down 24% versus the first nine months of 2009.

News and entertainment market orders for the first nine months of the year were 6% higher than in the same period in 2009.

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Management Changes

The company also said that chairman Tim Trotter will be stepping down as in 2011, and that it intends to appoint John Hawkins as his replacement.  Hawkins has led a number of companies through successful turnarounds and is currently nonexecutive Chairman of Psion plc.

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You can read the full Vislink announcement here.

A Financial Times article about the announcement is here.

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More Broadcast Vendor M&A: Vizrt Acquires Sports Replay Provider LiberoVision AG

broadcast industry trends, Broadcast Vendor M&A | Posted by Joe Zaller
Nov 22 2010

Broadcast graphics and MAM vendor Vizrt announced that it will acquire sports enhancements technology provider LiberoVision AG. 

LiberoVision technology enables analysis of sports events by creating virtual 3D replays, including of “artificial camera positions” that enables the broadcaster to move the viewer‘s perspective to areas not covered by the in-stadium cameras, such as over-the-shoulder of the quarterback. 

Vizrt is initially paying $6.12m for 60% of the company and will purchase the additional shares over the next 2 years on a sliding scale that is dependent on LiberoVision’s financial performance.

All installments consist of 80% cash and 20% Vizrt Ltd. shares.  As part of the transaction the founders of LiberoVision are committed to continue their employment with LiberoVision for a period of at least two years.

Vizrt CEO Martin Burkhalter said that the efficiency and functionality of LiberoVision’s technology is compelling to content owners.  “Integration of both systems will allow us to take the combined offering to our existing customers and attract new ones,” said Burkhalter

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You can read the full Vizrt press release here.

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Kit digital Reports Q3 Results, Discusses M&A Plans. Says it Expects to Announce a Material Acquisition by Q1 2011.

broadcast industry trends, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Nov 22 2010

IPTV asset management provider Kit digital released its third quarter 2010 results today.  It also provided lengthy commentary about the company’s business activity and M&A plans, following on from the recent disclosure that it intends to spend up to $81.75m on M&A. 

The company announced that it revenue in the third quarter of 2010 was $27.7m, an increase of 20% from in the previous quarter, and an increase of 151% versus the same period a year ago.  On a geographic basis, EMEA contributed 44% of total revenue, with the Asia-Pacific and Americas regions contributing 36% and 20% respectively.

EBITDA for the quarter was $4.4m, up slightly versus the previous quarter, and up 376% versus the same period a year ago.  On a GAAP basis, the company posted a net loss of $8m, which includes $5.1 million in non-cash charges, $4.5 million of integration expenses, and $1.3m in M&A expenses.  The company posted a GAAP loss of $342,000 last quarter and a GAAP loss of $11.1m in the in the third quarter of 2009.

For the first nine months of the year, the company posted a GAAP loss of $26.8m on revenue of $68.2m, and EBITDA of $11.6m.

For fiscal 2010, the company expects to report revenue exceeding $100m and operating EBITDA of approximately $18 million, up 109% and 267% respectively over the previous year.

“As we prepare for 2011, we see the BRIC markets continuing to be a strong growth driver for KIT digital,” said company president Gavin Campion.  “We are already very strong in areas like India, Southeast Asia, Russia and Eastern Europe. So further expansion into Brazil, Greater China and other parts of East Asia are our primary strategic objectives for 2011, as is expansion into certain areas of Europe where we are relatively weak.”

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Recent M&A Activity and Future M&A Outlook

The company also provided detail about its recent M&A activity, saying it has now integrated the operations of recently acquired MAM provider Brickbox Digital Media, video measurement vendor Accela Communications and systems integrator Megahertz Broadcast Systems, which has enabled it to cross-sell and up-sell their respective client bases. 

It also disclosed that it has reached a deal to divest some of its professional services activities for more than $12m, in a deal that is expected to close on November 30, 2010, and includes a spin-off a reseller license for the Kit digital’s VX software platform.

Commenting on plans for future M&A, Kit digital chairman & CEO Kaleil Isaza Tuzman said that the company’s aim is to extend its “current estimated 20%-plus global market share to more than 50% within the next 12 to 24 months… through a vanguard of organic growth complemented by highly selective, accretive acquisitions.

“However, we have also recently been considering more transformative acquisition opportunities, where we might be able to acquire a top competitor and significantly extend our market share in one action. It is for this purpose we announced last week that we priced an equity capital raise of $96 million.

“Having raised funds to support our larger acquisition strategy, we are currently working on a key M&A mandate, and expect to announce a material acquisition by Q1 2011.”

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You can read the full Kit digital Q3 earnings announcement here.

Information about Kit digital’s Q2 2010 results are here.

The prospectus for the company’s new share offering is here.

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Kit Digital Says it will Spend up to $81.75 Million on M&A

broadcast industry trends, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Nov 19 2010

Earlier today I wrote a post about Kit digital’s announcement that the company plans to sell shares of its common stock a public offering.

A short time later, the company filed its offering prospectus with the SEC.

One of the most interesting parts of this prospectus is the “Use of Proceeds” section, which details what the company plans to do with the money it raises.

As seen in the chart below, the company clearly intends to use the money it raises for M&A.

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In the filing, the company provided the following detail on how it plans to use to proceeds of the offering:

“We plan to use a significant portion of the net proceeds of this offering to finance the costs of acquiring or investing in competitive and complementary businesses, products and technologies as a part of our growth strategy. We currently have no commitments or agreements with respect to any such acquisitions or investments.

 “We also plan to use a portion of the net proceeds as a working capital reserve to more effectively compete in client bid proposals where net cash and bond requirements are often demanded by clients.  Other general corporate purposes include amounts required to pay for continuing product development expenses, salaries, professional fees, public reporting costs, office-related expenses and other corporate expenses, including interest and overhead.  Any additional net proceeds received from the exercise of the over-allotment option will be used for working capital and general corporate purposes.

 “Pending these uses, we intend to invest most of the net proceeds from this offering in short-term, investment-grade, interest-bearing securities.”

Kit Digital has made several acquisitions recently, including MAM provider Brickbox Digital Media, video measurement vendor Accela Communications and systems integrator Megahertz Broadcast Systems.

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You can read the full Kit digital share offering prospectus here.

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KIT digital to Sell up to $110m in Common Stock – Will We See More Long-Hinted M&A?

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Nov 19 2010

IPTV asset management provider Kit digital announced that it plans to sell shares of its common stock a public offering underwritten by Roth Capital Partners, Merriman Capital, ThinkEquity, Janney Montgomery Scott, and Northland Capital Markets.

According to a filing with the SEC, the company says it will sell 8 million shares of common stock at $12 per share, and that it has allocated an additional 1.2 million shares as an over-allotment option.  If all shares are sold, the company will collect $110.4m before expenses.   According to a separate 8K filing with the SEC, the Company expects to receive approximately $88,300,000 in net proceeds from the offering after underwriting fees and offering expenses, or approximately $101,800,000 if the underwriters’ over-allotment option is exercised in full.

This announcement comes on the heels of Kit digital filing an S-3 Shelf Registration with the SEC, under which it may sell shares of its common stock in one or more offerings up to a total dollar amount of $250m over an indeterminate period.

Although these filings did not say what the company will do with the proceeds of the recently announced offering, it has made several recent public statements that provide clues.  These include hints about M&A on multiple occasions, and the fact that it plans to achieve “long-term dominance in our industry segment.”  

When the company recently issued preliminary results for the third quarter of 2010, Kit digital chairman and CEO Kaleil Isaza Tuzman hinted at impending acquisitions, including the potential purchase of a major competitor.  ”Consistent with our previously stated strategic mandate, we continue to look at relatively small acquisitions that add geographical and sales vertical reach, which we intend to fund out of our treasury, cash from operations or limited assumption of debt. At the same time, we are considering more ‘transformative’ opportunities, where we might be able to acquire a top competitor and significantly extend our market share.”

The company also disclosed recently that it has tripled the number of shares of common stock reserved for issuance under its incentive stock plan, saying that it views stock options as an important management tool and a key means to motivate employees to continue to perform.

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You can read the Kit digital prospectus here.

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Autodesk Media & Entertainment Revenue Grows 5% in Q3 as Company Continues Shift to Software Only Sales

broadcast industry trends, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 19 2010

Autodesk reported that its Q3 revenue from media and entertainment (M&E) was $50m, an increase of 5% compared to the third quarter last year and an increase of 2% versus the previous quarter.  The company, which is most well-known for its CAD software, provides content creation, compositing, color grading and media management products to broadcast and post-production clients.

Year to date, the company’s M&E revenue was $146m, versus $143m during the first nine months of last year.

On the earnings conference call with equity analysts, company president & CEO Carl Bass said that Autodesk is working to transition from what was primarily a bundled business of hardware and software to eventually a software-only business.  “We’ve had a long stated goal of increasing our software component in [the M&E] business while ramping down our hardware… the software business is doing quite well,” said Bass. “We are selling less and less hardware every quarter. I’m very happy with the progress in the [M&E] group and the transition to software. Our competitive position is good there, and our products are used in many of the most important media and entertainment projects.”

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You can read the full Autodesk Q3 earnings press release here.

A transcript of the Q3 earnings conference call is here.

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EVS Q3 Revenue up 69.4%, Delivers 55% Operating Margins

broadcast industry technology trends, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 18 2010

Broadcast server and slow-motion vendor EVS announced strong results for the third quarter of 2010, saying it was the seventh consecutive quarter of growth.

The company reported revenue of €33.2m, with gross margins of 83% and operating margins of 55%.  Quarterly revenue jumped +69.4% vs. the same period last year, and was up 10% versus the previous quarter.  EVS said that revenue for the quarter grew +53.4% at constant exchange rate and excluding the big events rentals in 2010.

The company also said that its order book had increased by 23.1% (excluding big event rentals) to €29.8m.  Significantly 57.9% of the order book is for studio revenue.

On a segment basis, OB revenue was up 77.9% versus the same period a year ago and accounted for two-thirds of the total in the quarter.  Studio revenue was 11.4m, 34.3% of the total.   

On a geographic basis, EMEA revenue was €17.4m (52.5% of total), which is an increase of 33% compared to the same period a year ago.  The company said that the transition to HDTV operations and tapeless workflows continue to drive growth in EMEA.

Revenue from the Americas jumped 149.7% versus Q3 2009 to €9.1m (27% of total).  Stadiums were a key driver in the US market with 16 stadiums having bought new EVS solutions or upgraded existing equipment since the beginning of 2010.  The company said that the market in Latin America is moving well.

APAC revenue grew 115.6% to €6.7m, with the Youth Olympic Games and Asian Games being cited as growth drivers.

Year to date, the company’s revenue was €84.3m, a 50.3% increase versus the first nine months of 2009.  On a geographic basis, revenue during the first nine months of the year increased substantially in all regions, with EMEA 33.1%, Americas up 76.2% and APAC up 74.9%.

For the full year, the company said that it expects revenues to grow by more than 35%, with an EBIT margin of around 50%, despite significant investments in staff increases.

The company says it is entering 2011 with mixed expectations.  Company CFO Jacques Galloy said that 2011 “will be an odd year, without any major event (which represented more than EUR 10 million of rentals in 2010), benefiting from the industry recovery, while our company invests in innovation and expansion. Above all, 2011 has the Olympic year 2012 at the horizon.”

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You can read the full EVS Q3 earnings press release here.

The full EVS conference call presentation to equity analysts is here.

Information about the previous quarter is here.

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