Broadcast Vendor M&A: Harris Broadcast Completes Acquisition of Imagine Communications

Posted by Joe Zaller
Jan 17 2014

Harris Broadcast (HBC) has completed the acquisition of Imagine Communications, a provider of high density adaptive bitrate compression and transcoding products for the service provider market. Terms of the deal were not disclosed.

Privately held Imagine, which has raised $34.7m in venture funding since its inception, currently counts many of the top North America cable MSOs and telco operators as its customers. The majority of Imagine’s revenue currently comes from cable operators in North America, and HBC plans to expand this by selling Imagine’s products through its global sales channel.

According to Brian Cabeceiras, chief strategy officer at Harris Broadcast, a total of 32 employees and 4 contractors will join Harris Broadcast from Imagine.  This includes Imagine’s CTO Ron Gutman, the entire R&D team, the VP of Engineering, and key sales and service staff in North America.

When I first read about this deal last month, it seemed to me that Imagine is in a different business than HBC. Imagine sells high density transcoding appliances to pay TV operators (a very competitive space with several well-entrenched players), whereas Harris Broadcast develops equipment sold into broadcast engineering and operations environments.  These are different markets with different customers, business models, and competitive environments.

I contacted Cabeceiras, and asked him about the rationale for the deal, and whether the acquisition signifies a more broad-based move by HBC into the service provider market.

Cabeceiras made the point that “HBC already has a strong presence in Cable MSO’s via our Landmark Traffic, Scheduling, Ad Sales product where we see tight integration with Imagine Communications.”

He also highlighted that under new CEO Charlie Vogt, Harris Broadcast is a rapidly evolving company, and that Imagine is a good fit for both where HBC is today, and where it sees itself moving over time.  “Charlie and the management team will oversee a range of strategic development and investments in core Harris Broadcast platforms designed to speed innovation and a customer-first approach. Our roadmaps will advance our leadership in emerging market trends such as IP, Virtualization, Cloud, OTT, TV Everywhere, and 4K. As exemplified by Imagine, acquisitions are among the range of options a company has and will be evaluated on a case-by-case basis.”

As a veteran of the telecom industry, Vogt has likely seen similar technology transitions and he clearly intends to make good use of this perspective in his role at HBC. Vogt has made no secret of his belief that HBC must aggressively move its portfolio in the direction of software defined networks and a virtualized broadcast infrastructure in order to support the company’s customer base as they move towards new business models that focus on multi-screen delivery and monetization.

With this context in mind, Cabeceiras says Imagine is both a “strong fit in HBC’s core broadcast and media markets as our customers add OTT services and targeted advertising,” and also as provides the foundation for entering the cable MSO/telco market by providing a ready-made customer base facilitated by “strong product for Cable MSO with validated best-of-industry picture quality.”

But most importantly,Cabeceiras says HBC believes that the acquisition of Imagine “fits HBC’s TV Everywhere and MultiService SDN grand strategy,” which includes building “the first true ‘MultiService SDN’ (Software Defined Network), integrating sales, scheduling, automation, playout and delivery throughout both linear and non-linear content distribution networks, utilizing cutting edge software breakthroughs that run in high density, low power commercial-off-the-shelf (COTS) and blade-server environments, consistent with HBC’s vision of software-centric, virtualized operations.”

“TV Everywhere is the future of our industry, and our customers are vigorously pursuing this path to expand their business models and improve the monetization of content across any screen,” said Vogt in a statement about the deal. “The advanced Adaptive Bit Rate (ABR) technology created by Imagine combines quality, density and a small footprint to greatly leapfrog anything else on the market today and improves transcoding economics up to a factor of 10 over competing alternatives. Our content creator and content distribution customers, including cable, MSO and telecommunications service providers, will benefit significantly from end-to-end portfolio integration that establishes a clear pathway to linear and non-linear viewing parity across every screen.”

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