Archive for the ‘Devoncroft Digest’ Category

Reminder — Media Technology: Strategy & Valuation Conference at NAB 2012

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor Brand Research, Broadcast Vendor M&A, Broadcaster Financial Results, Devoncroft Digest, Top Broadcast Vendor Brands | Posted by Joe Zaller
Apr 13 2012

If you are attending the 2012 NAB show you might want to consider setting aside some time to attend a new half-day conference called “Media Technology: Strategy and Valuation.

We are excited to be co-producing this event along with the NAB Show and Silverwood Partners.

This session is being held in room N237 of the Las Vegas Convention Center on Sunday April 15th from 2:00 p.m. to 6:00 p.m., and it’s free for all registered attendees of the 2012 NAB show.

This conference will address industry-specific factors driving the valuations of companies including changing market dynamics, new technology, and evolving customer requirements. It is intended for industry technology executives, private equity investors, and venture capital investors in the media technology sector.

You’ll hear from experts from the financial community, broadcast industry technology buyers, leading service providers, and media technology market research analysts.

Download full agenda and speaker bios here

 

MEDIA TECHNOLOGY: STRATEGY & VALUATION

Presented by:

  

 

April 15, 2012

Las Vegas Convention Center, Room N237

 

1:30-2:00pm       Registration

 

2:00-2:25pm       Strategic Implications of Transitioning to Cloud and SaaS Platforms for the Media Industry

Presented by David Peto, CEO, Aframe

What is the reality of becoming a Software-as-a-Service (SaaS) business?

  • Opportunities and challenges with the business model from the SaaS provider perspective
  • Lessons learned from providing SaaS services to large media companies
  • Key customer variables for deciding to use SaaS services

 

2:25-2:55pm       The Broadcast & Media Technology Industry in 2012

Presented by Joe Zaller, President, Devoncroft Partners

  • Summary of key data derived from the newly published 2012 Big Broadcast Survey, the largest and most comprehensive study of the broadcast industry. Overview of the latest research from the IABM will also be provided.
  • Does brand perception impact valuation? Using data from the annual Big Broadcast Survey, color commentary and market research data will be provided to show how brand perception impacts both customer loyalty and Company valuation, and what vendors can do to change their brand perception for the positive.

      

2:55-3:25pm       Strategic Industry Analysis: Valuations, M & A, and Equity Financing

Presented by Jonathan Hodson-Walker, Managing Partner and Joshua Stinehour, Senior Vice President, Silverwood Partners

Analysis of strategic industry trends and the specific factors that affect company valuations:

  • Review of transaction activity and valuations
  • Technology shifting from a supporting role to a strategic role
  • Business opportunities and models evolving rapidly
  • What businesses are buyers targeting and why?
  • Analysis of Software, SaaS vs. hardware valuation and reasons for differentials

 

3:25-3:50pm       Online Video: Threat, Opportunity, or Both?

Presented by Andrew Taylor, VP Business Development, Grab Media

  • Expert insight on the business models of new media and multiplatform distribution.
  • Commentary on developments in online video, advertising technology, and new distribution and syndication models.

 

 

3:50-4:00             Break

 

 4:00-4:20pm       Technology Transition: Software, File-based, Cloud

Presented by Bernt Kåre Johannessen, Chief Development Officer, Vizrt

  • The business implications of file-based workflows, cloud computing, and multi-platform content delivery for both broadcasters and technology vendors. 
  • Efficiencies for the customer, business model implications, business and technology implementation challenges, revenue models, and required technologies.

 

 4:20-4:40pm       Executing the Strategic Plan: Suggestions and Recommendations for Executives

Presented by Graham Sharp, Director of Media Asset Capital

  • Understanding value and differentiation of business offering to customers
  • Unlocking strategic value of business
  • Tactical implementation of the strategic plan to fully realize value

 

 4:40-5:00pm       The Broadcast Buyer Perspective

Presented by Pat Sullivan, President and CEO, Game Creek Video

  • Game Creek is one of largest Outside Broadcast Truck providers in the US with a client list that reads like the who’s who of Broadcast: ABC, CBS, ESPN, FOX, HBO, NBC, MLB, NBA, and the NFL to name a few!
  • With an annual multi-million US$ budget being spent with Broadcast Equipment vendors, what do GCV want from their suppliers and what could they do better?

 

5:00-6:00pm       Cocktail and Networking Reception

 

Devoncroft Digest – August 15, 2010 – Earnings Galore, Broadcast Industry M&A Continues

broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Devoncroft Digest, market research | Posted by Joe Zaller
Aug 15 2010

The Devoncroft Digest is a semi-regular amalgamation of news items I’ve seen recently that I think might be interesting / important for readers and clients. 

Due to my travel schedule it’s been two weeks since the last digest post.  Here are a few of the things that have caught my eye during this time.

Earnings Season Continues

We are now in the heart of earnings season, and a large number of tech vendors, platform operators, service providers and broadcasters.  For the most part these results have been generally positive, with many companies saying that they are seeing the green shoots of recovery taking hold. 

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Broadcast Technology Vendor Earnings

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Vizrt Q2 Revenue Rises 17%, CEO Says Market is Improving

Broadcast graphics and asset management provider Vizrt announced its Q2 and 1H results. Revenue for the quarter was up 17% y/y, driven by strong growth in the Americas, which was up 48% y/y.

Gross margins for the quarter were 65%, well ahead of the 58% that the company achieved during the same period a year ago. Broadcast graphics accounted for 72% of the company’s total revenues in 1H 2010.  According to the company, Vizrt’s graphics business is up 33% y/y.

Full details here.

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Chyron Q2 Losses Narrow as Revenue Jumps 20% 

Broadcast graphics provider Chyron announced its financial results for Q2 and 1H 2010.

Q2 revenue was $6.94m, up 20% versus Q2 2009.  Gross margins for the quarter were 70%, up slightly from the previous year.  Q2 product revenue was $5.4m, up 18% y/y.  Service revenue increased 29% y/y to $1.19m.  Service revenue accounted for 22% of the quarter’s total revenue. The company posted an operating loss for the quarter of $680,000, a 52% y/y improvement; and a net loss of $710,000, 35% better than a year ago.

Full Details Here

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Miranda Q2 Revenue Up 3% y/y, +11% q/q. CEO Says Market Conditions Improving

Broadcast infrastructure provider Miranda Technologies announced their Q2 2010 results.  Revenue for the quarter was C$32.1m, up 3% from the same period a year ago and up 11% versus the previous quarter.  International sales were up 11% y/y.  Sales in the US were up 10% y/y

The company’s net income jumped 173% to C$3.5m as expenses were reduced during the quarter, and EBITDA rose by 125% to C$6m versus the same period in 2009.  Gross margins were 60%, slightly down from Q2 2009, but up from 57.7% in the previous quarter.  This is a good showing in a competitive market, which the company attributes to a higher margin mix, and increased sales of routing switchers.

Full Details Here

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DivX Q2 Revenue Jumps 29%

DivX announced that its Q2 revenues were up 29% y/y and that its licensing business was up 23% y/y.  The company, which is in the process of being acquired by Sonic (who also announced their numbers recently) posted a GAAP Loss of $2.8m, and non-GAAP NI of $760K

Read the Divx earnings press release here 

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DG FastChannel Reports Record Q2

Advertising and broadcast content delivery specialist DG FastChannel reported record results for its FY2010 second quarter, blowing past the expectations of equity analysts. 

Revenue for the quarter was $60.3m, well ahead of the $55.6m consensus estimate of equity analysts.  This represents a 38% revenue increase versus the same period a year ago, and an increase of 11% from the previous quarter.  Net income for the quarter was $9m, up 150% increase versus Q2 2009 and up 12.5% versus the previous quarter.

Significantly, the company’s revenue from the delivery of HD advertising content increased 99% to $23.9 million versus the same period of 2009.

The company also that it retired all of its outstanding debt, thanks to a recent public equity offering that raised net proceeds of approximately $108m. As a result of this offering, the company reported that as of June 30, 2010, it has $79.6 million in cash and no debt.

Company Chairman & CEO Scott Ginsburg said “The Company continues to execute on its strategic business plan… revenue, margins, earnings and net debt show marked improvements during the second quarter.”

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Harris Broadcast Records $21m Operating Loss

Harris Corporation reported its Q4 and full year 2010 results.  While the company as a whole did well, the broadcast communications division continued to struggle.

For the full year, revenues from the broadcast communications division were down 17% versus the previous year.  For Q4, the company’s broadcast revenues were down just 1.9% y/y, although orders were down 12.5% versus the same period last year.

In the 4th quarter of FY 2010, Harris posted an operating loss of $21m.  According to the company, this “includes $7 million in charges related to cost-reduction actions and $6 million in inventory write-downs associated with weaker demand.”

Harris CEO Howard Lance said the following about the revenue of the broadcast division: “we continue to expect revenue in a range of $490 million to $510 million with break-even operating results. We expect to see continued operating losses in the first half of the year with profitability improving in the second half of the fiscal year.”

Full Details Here

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RealD Reports 1st Results As Public Company

3D specialist RealD announced its first results as a public company, and reported huge y/y increases in revenue and EBITDA, which were up 152% and 387% respectively.  The company announced that it has now deployed 7500 screens, significantly more than Technicolor, who announced recently that they have now deployed 250 screens, 

Read the RealD earnings press release here.

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Broadcaster & Platform Operator Earnings

DISH Network Reports Second Quarter 2010 Financial Results 

DISH Network reported total revenue of $3.17 billion for the quarter ended June 30, 2010, a 9.1 percent increase compared with $2.90 billion for the corresponding period in 2009.

DISH Network lost approximately 19,000 net subscribers during the quarter ended June 30, 2010, ending the quarter with approximately 14.318 million subscribers.

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Ascent Media Reports Lower Revenue, Higher Losses

Digital media service provider Ascent Media reported increased losses and lower revenue for the second quarter ended of 2010.  The company attributes the lower results to market volatility and lower capital spending by customers. 

Revenue for the quarter dropped 13% to $99.5m, while revenue for the first six months was off 11% to $204m.  The company said that the decline in second quarter and year-to-date revenue was driven primarily by a reduction in revenue from the Content Services segment.

Q2 losses from continuing operations before income taxes were $17.5m, compared to a loss of $12.4 million in the prior year period. Year-to-date, the loss from continuing operations before income taxes was $28.6 million compared to a loss of $23.2 million for the six months ended June 30, 2009.

 “Ascent’s year-to-date operating results have not met our expectations as uncertainty about the timing and pace of the economic recovery has led to ongoing volatility in the media marketplace,” said William Fitzgerald, Ascent’s CEO. “A consequence of the current environment is that our customers have continued to take a cautious approach to capital spending.”

Fitzgerald was more upbeat about the rest of 2010, saying “We are beginning to see positive indications of an upturn, including first half revenue improvement in our creative services business, a strengthening pipeline of feature film and other projects, and rising industry advertising estimates for the second half of 2010.”

Ascent’s full earnings press release can be found here.

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Scripps Reports Second-Quarter Results 

Scripps reported operating results for the second quarter of 2010 that showed a continuing trend of significantly improved year-over-year revenue performance in the television division – up 22 percent from last year.

You can read the Scripps earnings release here.

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Liberty Media Reports Second Quarter 2010 Financial Results

The Liberty Media press release is here.

Liberty Media investor conference call transcript here.

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DIRECTV Q2 Rev Up 12%, Net Income up 33% Buys Back Stock 

DTH satellite operator DirecTV announced that it grew revenues by 12% to $5.85Bn and Net Income 33% to $543 Million.

DirecTV Q2 Press Release Here

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Cablevision Systems Corporation Reports Second Quarter 2010 Results 

Cablevision’s Q2 profits fell by 30% but its revenues were up 5.8% to $1.802 billion versus the same period a year ago, which the company says reflects solid revenue growth in Telecommunications Services and Rainbow, offset slightly by a decline at Newsday. Consolidated adjusted operating cash flow grew 9.0% to $677.6 million and consolidated operating income grew 23.0% to $416.8 million, both compared to the prior year period.

You can read the Cablevision press release here

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WSJ.com – Net Rises at Time Warner Cable, Falls at Cablevision

According to a Wall Street Journal article, Time Warner’s second-quarter earnings rose 8.2% on solid revenue growth, but the nation’s second-biggest cable-television provider saw the same weakness in subscriber additions in July felt by its larger cable counterpart, Comcast Corp.

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News Corp Reports Q4 and Full year Results – TV Station Operating Income up 13%

News Corp’s Q4 revenue increased by 6% and it hauled in Net Income of $875m.  Significantly, the company’s TV Operating Income was up 13% versus the same period last year, driven by an improved TV station advertising market.

Here’s the full News Corp press release 

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CBS 2Q TV Station Revenue Climbs 31%

According to leading industry website TV News Check, TV station revenue at CBS jumped by 31%. The company also realized a 17% increase in local broadcasting revenue (TV stations plus CBS Radio) to $678.2 million from $579.5 million in the year-ago quarter. Sumner Redstone, the company’s executive chairman called the results “Terrific”

Full story from TV News Check

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Sinclair Broadcast Group Reports Q2 Results.

Sinclair Broadcast Group, one of the largest US TV station groups reported that its net broadcast Q2 revenues from continuing operations were up 19.3% versus the prior year.  The company had net income of $17.3 million versus $2.8 million in the prior year period.  Local net broadcast revenues, which include local time sales, retransmission revenues and other broadcast revenues, were up 16.6% in the second quarter 2010 while national net broadcast revenues, which include national time sales and other national broadcast revenues, were up 27.7% versus the second quarter 2009.

Full story from TV News Check

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WSJ.com – Discovery Turns In 40% Decline in Profit 

According to an article in the Wall Street Journal, Discovery Communications posted a 40% drop in its second-quarter profit, hurt in part by costs related to its recent $3 billion debt refinancing. Still, the cable-network operator showed revenue and operating-profit growth, and announced a $1 billion share repurchasing program.

Full article from the Wall Street Journal

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Barrington Sees 14% Jump In 2Q Revenue

Barrington Broadcasting Group announced that gross revenues for the quarter ended June 30 increased 13.6% to $32.7 million from $28.8 million for the same period a year earlier. The company said the increase was primarily due to 16.7% increase in national revenues, a 4.7% increase in local revenues, and an increase in political revenues of $900,000 to $1 million.

Full Story from TV News Check

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Gray Beats Street

According to TVB, Gray Television came in ahead of analyst expectations for the second quarter. The pure-play TV group posted revenues of $75.6 million for the 36 stations, up 16 percent from a year earlier. Net income was $534,000 compared to a loss of $6.6 million a year ago. After payment of $6.4 million in dividends, net loss to common stockholders was $5.9 million, or 11 cents a share.

Full Story from TVB

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Broadcast Industry M&A Continues

Blackmagic Buys Assets of Echolab

As predicted here last month, Blackmagic Designs announced that it has acquired “all the assets of Echolab,” putting Blackmagic in the production switcher business.

Echolab was forced into liquidation a few months ago when its primary shareholder stopped funding its operations.  The company had been in business for more than 35 years, specializing in low-end production switchers.

Blackmagic is buying Echolab for the latter’s ATEM product line, which was introduced about two years ago and has been continuously upgraded since under Echolab’s former CEO Nigel Spratling, who apparently not part of the Blackmagic deal and has now joined Ross Video in a marketing role.

This is great news for the affected Echolab employees, who were left jobless in an instant when the company shut its doors in mid-May.  It’s also good news for the industry, because the ATEM switcher product line, which looks like a pretty good product, will continue to be available through Blackmagic.  In fact, Blackmagic has said that it is adding to the engineering team responsible for ATEM.

It will be interesting to see how Blackmagic approaches the production switcher market, which is different than the company’s core post production market.  The part of the production switcher market where Echolab is active has considerable competition. In addition to Echolab, Sony, Panasonic, JVC, For-A and Ross Video are all very active players in this space.   

In addition to the competitive aspects of the deal, it seems to me that selling production switchers is a bit of a departure business-wise for Blackmagic.  Production switchers are a “high-touch” product category.  They are mission critical elements of the live production workflow, and as such they can require extensive demonstrations and training.  The majority of Blackmagic’s products are plug-in cards or stand-alone units, which are sold primarily through third-party dealers.  

At this point, I am unsure whether Blackmagic’s all-dealer sales approach is a positive or a negative for Echolab.  On the plus side, the compact HD production switcher market is a large and somewhat amorphous, running the gamut from broadcasters to corporation, to churches to education –  so it requires a large dealer network, which Blackmagic already has in place.  On the other hand production switchers require a specialized sales approach. Every buyer wants a demonstration, which typically involves shipping equipment and people, thereby increasing the cost of each sale.  Blackmagic will probably have to augment their approach somewhat in order to be successful selling production switchers.

Still if they can get the distribution right, Blackmagic may have a good chance of making their purchase of Echolab a success.  Blackmagic most likely paid very little for Echolab’s assets, and since it’s buying the assets and not the company, it gets a brand new HD switcher line, but not 35 years of legacy products that need support.  And Blackmagic does have experience buying distressed “traditional” vendors and changing their approach.  Last year, Blackmagic acquired leading color grading vendor Da Vinci Systems, and proceeded to radically change Da Vinci’s market approach, not to mention its pricing, turning a $200,000 hardware product into a sub-$1000 product according to TVB Europe.

Arguably however, Da Vinci’s color grading products (which are used off-line in post production) were easier to port to software platforms – and they still require a very expensive hardware controller.  Live production switchers are a different kettle of fish than off-line color grading systems for post production.  They are the key element of any live broadcast production, and they are still a relatively expensive hardware platform that requires specialist sales and support.

Blackmagic CEO Grant Petty is obviously familiar with this.  In the company’s press release that announced the deal he said: “I have been using live production switchers since I was in school where we covered local theater, sports, racing and bands. I think it’s the most exciting way to do production because it’s all live and thousands of people are watching what you are doing! Production switchers need to be powerful while also being familiar and easy to operate.”

Petty also said that “Since the acquisition, we have already dramatically expanded the engineering team working on ATEM. This fresh engineering team, which is a combination of new as well as experienced EchoLab staff, will allow us to move faster in adding new features to the ATEM product.”

Blackmagic will be displaying the ATEM on its booth at the IBC show next month. 

Here is a link to the full press release announcing the deal.

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Transcoding Consolidation — Telestream to Acquire Anystream

Over at his always informative Business of Video blog, Streaming Media’s Dan Rayburn writes that Telestream is to Acquire fellow transcoding provider Anystream from parent Gab Networks.  This is a deal has long been rumored, and according to Rayburn has now been confirmed by the management of both companies.

There’s been quite a lot of activity in the transcoding space recently.  Ripcode was sold to RGB networks and Elemental Technologies announced other week that it had raised $7.5m of new venture money, bringing its total to $14m

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Other Broadcast Technology Vendor News

Chyron Appoints New Chief Commercial Officer 

Chyron has appointed Susan Brazer as its new Chief Commercial Officer.  According to the company’s press release, Brazer has a big job, taking responsibility for “commercial strategy and all product and services revenues, directing its worldwide sales network of direct sales, resellers/systems integrators and joint ventures in Europe, Asia, Latin America and the Middle East.”

This is the second C-Level appointment recently.  The company previously announced that it had appointed Bonnie Barclay as VP and Chief Marketing Officer.

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New COO at Vizrt

Vizrt has appointed François Laborie as its new Chief Commercial Officer. Laborie replaces David Zerah who left Vizrt to become managing director of gaming firm Dragonfish.

Laborie joined Vizrt at the beginning of 2006 as the Company’s Executive Vice President Marketing. At the beginning of 2010, he took on the additional role of Regional President for the EMEA region.

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3D News

Technicolor announced this week that it has now installed its 3D system at 250 screens – good progress, but far less than clear leader RealD’s 7,500.

 

Mobile TV News

 According to an article in TVB,  Broadcast and WiFi Take Wind Out of FLO TV Sales 

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Other News

The Financial Times reports that News Corp has refused to refuses to raise its offer for BSkyB 

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Also in the FT, the BBC is under fire over Canvas project 

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Market Research Note of the Week:

Who are the Most Important Decision Makers in Broadcast Technology?  Vendors Predict Shift Towards Operations and IT

In a recent article, “Broadcast Industry’s Largest Market Study Reveals Most Important Technology Trends,” the move toward file-based, tapeless workflows was highlighted as one of the most important issues to broadcasters today.

But how will this shift affect how broadcast technology products are purchased, not to mention who buys them? Traditionally, these products have been purchased primarily by engineers. Will this be the same for products that are increasingly IT-based, or will there be a new set of buyers? Broadcast vendors need to know this because a new set of buyers may require a new market approach.

To find out, we asked the nearly 800 broadcast technology vendors who responded to the 2010 Big Broadcast Survey who they feel is currently the most important decision maker in the sales process, and who they feel will be most important in two to three years.

Let’s start with the most important buyers today. Respondents were asked, “When selling your products/services, which category of customer is typically the most important decision maker today?” According to responses, broadcast tech vendors see engineering staff as their most important customers, followed by operations, IT and finance personnel. Engineers are clearly seen as the most important decision makers, with operations staff a distant second.

But what about the future?

To read the full article, including four charts that break down the results, click here.

Devoncroft Digest — July 30, 2010 – Earnings Season Continues, Grass Valley Finds a Buyer, More Broadcast Industry M&A, Harris Creates New Division, Elemental and Envivio Close Funding Rounds

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Devoncroft Digest, market research | Posted by Joe Zaller
Jul 30 2010

The Devoncroft Digest provides an overview of and insight into industry news items that I think might be interesting / important for readers and clients. 

Here are a few of the things that have caught my eye this week.

Earnings Season Continues

A number of broadcasters, TV platform operators and broadcast technology vendors announced their earnings this week. With one or two exceptions the results were generally positive.

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Broadcast Technology Vendor Earnings

Harmonic posted strong Q2 results.  The company’s revenue was up 18% versus the same period last year, and up 13% versus the previous quarter.  More importantly, the company’s net income of the quarter was $4.4m vs. a loss of $7.9m during the same period last year.

On the company’s earnings conference call and slide presentation Harmonic executives also discussed the pending acquisition of video server company Omneon, and provided a bit more information on Omneon’s business.  Omneon recorded bookings of $57.8m during the first half of 2010, a 19% y/y increase.  For the full year, Omneon is expected to have revenues of $120-$125m, with (non-GAAP) gross margins of 57-57% and (non-GAAP) operating margins of 6-7%.

The market seemed to like what Harmonic had to say.  On the day after the earnings announcement, Harmonic shares were up by almost 17%.

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Technicolor announced its results for the first half of 2010 this week, which saw revenues decline 18.5% versus the previous year.  The company achieved EBIT of €15m from “continuing operations,” but recorded an EBIT Loss of €109m from “discontinued operations.”  The company attributed this EBIT loss “mostly to Grass Valley,” which found a buyer this week after being for sale for more than a year (more on that below).  More information about Technicolor can be found in the slide presentation that the company used during its analyst earnings conference call. 

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Belden issued strong numbers for Q2, beating the expectation of equity analysts.  Driven by strong results from the Americas (which were up 27% y/y), the company’s revenues rose 24% versus the same period a year ago, and 6% versus the previous quarter.    The company issued an upbeat forecast and raised its guidance for the future.

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Audio (and now video) specialist Dolby Labs delivered strong results for its 3rd quarter.  The company’s revenues rose 34% versus the same period last year, and its net income increased by 25% versus Q3 2009.  Dolby which has been pushing aggressively into the 3D and Digital Cinema markets, recorded a non-cash impairment charge of $9.6 million in cost of revenue related to digital cinema systems provided under operating leases to exhibitors.

Separately, Dolby announced an additional $300m for its stock repurchase program, which has the objective of offsetting dilution from the company’s equity compensation programs.

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Cable technology vendor ARRIS announced its preliminary Q2 Results.  The company’s revenues were up slightly, but its net income and gross margins were both down.  Investors were unhappy with these results and sent the company’s shares down sharply.

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Leading set-top box vendor Pace announced strong results for the first half of 2010.  For the first six months of the year the company’s revenues rose by 21% and profit jumped by 46% versus the same period in 2009.  Separately, the company announced its intention to acquire 2Wire (see below).

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Broadcaster & Platform Operator Earnings

European satellite operator Eutelsat announced this week that it achieved a record year, and that its revenue and EBITDA growth both exceeded 11% versus 2009.  The company’s earnings press release that it now delivers 3,662 broadcast TV Channels, and that the number of HDTV channels had grown by 80% during 2010.

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Belo, one of the largest pure-play TV broadcasters in the US delivered strong results for its second quarter of 2010.  The company’s revenue for Q2 was up by 13% versus 2009, and its net income almost doubled.  Significantly the company’s revenue from the automobile sector was up by 51% and its digital (website) revenues grew by 14%. 

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US cable operator Comcast reported that its revenues increased by 6.1% in its second quarter of 2010/  The company’s operating income and cash flow were both up, but it lost 256,000 basic video subscribers.  The company, which is currently seeking approval to purchase NBC-Universal, disclosed that it spent a total of $59m on the deal during the quarter

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UK-based Virgin Media delivered strong results for its second quarter.  The company’s revenue, operating income and cash flow all increased. 

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Broadcast Industry M&A Continues

Multiple broadcast technology M&A deals were announced today:

  • Grass Valley is to be acquired by Francisco Partners, a private equity firm
  • Ross Video is buying Codan
  • Pace announced  proposed their acquisition of 2Wire

 

Francisco Partners has made a binding offer to buy 100% of the shares in Grass Valley

After more than a year on the block, and several rumored bids, Technicolor appears to have found a buyer for Grass Valley – a Private Equity firm called Francisco Partners.    According to Technicolor CFO Stephane Rougeot “This binding offer is a key step in the largest of the disposals we decided to make as part of the strategic refocus of our activity portfolio. This will clarify and solidify our financial profile. This is also positive news for Grass Valley Broadcast employees and customers who will benefit from the engagement of a new shareholder recognized as a leader in technology-based businesses.”

Francisco is buying all of Grass Valley, except for the transmission business, which is being retained by Technicolor.

Technicolor certainly did not get rich from this deal.  It paid $172m for Grass Valley in 2002, and then acquiring multiple companies (including Canopus for more than $100m) over the past few years, the company has now struck a deal with Francisco Partners which according to a Technicolor press release values Grass Valley at $100m.

After reviewing the structure of the deal, one industry insider told me that Grass Valley was sold at what one industry insider described to me a “fire sale.”  In fact it appears that no money will change hands, and that Technicolor will actually pay €20m to Grass Valley in order to fund “ongoing management of the activity.”

For its part, Francisco Partners will sign an $80m IOU, which carries capitalized interest of 5% per year.  This means that Francisco will not pay anything for Grass Valley for at least five years, and that Technicolor will make a large cash injection into the company to keep it going. 

Clearly Technicolor wanted to get rid of Grass Valley and its associated losses so it can focus on its now core business activities.  The only silver lining for Technicolor is that it has the right to “receive additional consideration from the buyer based on the potential future remuneration of the new owners of the disposed entity.”

Grass Valley announced the deal in a press release and a letter to customers.    The company has set up a deal-oriented website where information about the transaction has been published, and has also created an “Ask Jeff.” (as in Jeff Rosica, head of the Grass Valley Broadcast & Professional business) email address where questions about the deal can be sent directly to the company. According to Rosica, who was interviewed by industry website TVNewsCheck, it’s Business As Usual At Grass Valley.

Grass Valley is one of the industry’s great companies and I am sure that the people there are happy to finally have resolved their fate.  Let’s hope they can now focus on making great products – and of course money for their new owners.

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Ross Video Acquires Codan

Ross Video, which is best known for its production switchers and newsroom automation systems, announced that has it entered into a letter of intent to buy 100% of the shares of Codan Broadcast Products Pty Ltd. The sale, subject only to the finalization of due diligence, is scheduled for completion on 31 August, 2010.  The deal will expand the Ross portfolio by adding Codan’s product range of routing switchers, signal processing and audio monitoring.  It also strengthens Ross Video’s foothold in the important Australian broadcast market. This is the second Ross acquisition in the past two years. In 2009 Ross purchased Dutch graphics firm Media Refinery.  

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Pace to Acquire 2Wire

Leading set-top box vendor Pace plc announced its proposed $475m acquisition of 2Wire, a provider of residential gateways and associated software for the broadband service provider market.  According to the press release, 2Wire has established customer relationships in the tier one telco market, including AT&T, which has been a customer of 2Wire for 10 years and uses 2Wire solutions in its U-Verse platform.  2Wire is currently owned by a consortium including Alcatel-Lucent, AT&T, Telmex, and Oak Investment Partners.

Pace says that following the completion of the acquisition it will be the number one provider of telco residential gateway devices in the US and the number three globally.

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3D News – RealD Insiders Cash in on IPO

The Wall Street Journal reports that following on from their successful IPO, insiders at 3D firm RealD Insiders Made More Money in IPO than Company Did.  A skeptical Wall Street equity analyst is quoted in the article as saying that the only reason for the IPO was to generate liquidity for investors.

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Other Broadcast Technology Vendor News

Harris Creates New Division, Names Means GM

The changes continue at the broadcast communications division of Harris.  The company announced this week that it has created a new “Workflow, Infrastructure & Networking” (WIN) business unit, and named newly hired Doug Means as its General Manager.  According to the company’s press release, Means will lead the newly formed WIN business unit, which encompasses the Harris Broadcast infrastructure, networking, server, automation and asset management product portfolios. WIN was formed as part of an overall strategy to create scale, reduce organizational complexity and deliver more interoperable solutions to address the continually changing needs of Harris Broadcast customers.

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 Ross Video Appoints Nigel Spratling to Marketing Role

Production switcher specialist Ross Video has appointed industry veteran Nigel Spratling to a marketing role at the company.  Spratling was most recently the CEO of Echolab, which was forced to liquidate earlier this year when its primary shareholder pulled the plug.  The fate of Echolab is still undetermined, but I have been hearing rumours that Blackmagic Designs is set to announce that they have acquired the company’s assets. 

 

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Evertz Lands Big International Order

Canadian infrastructure vendor Evertz, which prides itself on not doing marketing, took the unusual step of issuing a short press release to announce the fact that the company has received orders in excess of C$7m from an unnamed international customer.   

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Elemental Closes $7.5m Funding Round

Video transcoding firm Elemental Technologies, which uses GPU processing announced that it has closed a $7.5 funding round, bringing the total VC money raised by Elemental to more than $14 million.  The round was led by Steamboat Ventures, with Voyager Capital and General Catalyst Partners also participating.  Interestingly, according to an SEC document filed by Elemental earlier this year,  the company had provisioned to raise up to $9m.  The company says it intends to use the capital to expand its business in the United States and internationally.   Transcoding is a tough business as evidenced by the recent sale of Ripcode (who had raised considerable financing) to RBG.  Perhaps Elemental’s unique GPU-based approach will enable the company to thrive – it gets pretty good reviews from broadcasters according to an article about Pitch Blue which appeared in Broadcasting & Cable magazine this week.

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Envivio Raises $15m

GigaOm property NewTeeVee reported this week that Envivio, another player in the video encoding / transcoding space,  has secured $15m in additional funding and shaken up its management team. 

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Other Platform Operator News

Ascent Media Hires 3 New VPs

Ascent Media has appointed three new vice-presidents for its media and digital services operations in Burbank, CA. 

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MobileTV News

The Wall Street Journal published an interesting article about the state of the mobileTV marketin the USA, which discusses Qualcomm’s Plans for FLO TV, the US broadcaster-backed Open Mobile Video Coalition and mobileTV operator MobiTV.  The WSJ’s finding?  The picture for mobile TV in the US is “fuzzy.”

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Other News

Broadcasting & Cable magazine’s Glen Dickson wrote an interesting article about the new HD file delivery platformsthat are being rolled out by Ascent Media and DG FastChannel. 

According to B&C, Pitch Blue, the new HD file delivery platform from Ascent Media and CBS is now delivering HD content to 1,350 US TV stations, while the new system from DG FastChannel has been deployed in 500 US TV stations.  The B&C article also highlights the need for transcoding systems in TV stations to convert these HD file to house formats.  As mentioned above, Elemental gets a good review from stations.    

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Market Research Note of the Week: Reliability Rankings of Broadcast Technology Vendors — The Top 30 Globally

Broadcast technology products are purchased by discerning customers for what are often mission-critical applications. Thus, the reliability of products is a paramount concern for buyers of these products.

To measure the rankings of the reliability of vendors, respondents were asked to rank broadcast technology vendor brands for “reliability” on a 10-point scale, with 10 being best in the market and one being worst in the market. The top 30 ranked brands are shown in the graph for the global sample of all respondents. There are a wide variety of vendors on this list, including large and small companies and those who produce audio and video products.

When reviewing these results it’s important to understand how many products are produced by each vendor on this list. This will help us to understand if reliability comes from small, focused companies or large, multiproduct vendors.

The 2010 BBS evaluated 27 separate product categories. As with the previously published top 30 quality rankings, single-product companies (those who were covered on only one product category in the 2010 BBS) dominate the rankings for reliability.

To read the full article, including a breakdown and analysis of the findings, click here.

Devoncroft Digest July 24, 2010 – Earnings Season Begins, More Broadcast M+A (and an IPO), Echolab Rumors

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor Brand Research, Devoncroft Digest, Top Broadcast Vendor Brands | Posted by Joe Zaller
Jul 24 2010

The Devoncroft Digest is a semi-regular amalgamation of news items I’ve seen recently.  Here are a few of the things that have caught my eye recently.

Earnings Season Kicks Off for Broadcasters and Broadcast Tech Vendors:

Quarterly earnings are starting to roll in from both broadcasters and broadcast technology vendors.  For those who are on an annual fiscal year, it’s a chance to see how the first half of the year went, and to hear management thoughts on the second half of 2010.

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Broadcast Technology Vendor Earnings:

Avid reported their numbers for the second quarter. Sales for the quarter were $162.2m, an 8% y/y increase – and the company pointed out that this was the first quarter of y/y growth for both audio and video since 1997.  The company’s shares jumped on the news.

While discussing uses of cash on the company’s earnings call, Avid executives talked about the amount of cash used for the Euphonix acquisition.  I was not aware of the purchase price for Euphonix, but it turns out that according to an SEC filing, Avid paid 17.6m for Euphonix, including cash of $12.6m and cash of $5m.

For more on Avid’s results, here’s a link to a transcript of Avid’s Q2 earnings call, and an article from Barrons about the results.   

Speaking of Avid, Post Magazine’s Jonathan Moser recently published an interesting Q&A with Avid COO Kirk Arnold about present & future status of the company.  In my opinion, both Arnold and CEO Gary Greenfield have done a good job recently with this type of interview.  One of Avid’s strengths is their user community and the company is clearly working to communicate with their base.  Here’s another example.

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Barco reported strong results for the company’s Q2 and first half of 2010.  In the earnings press release, company President & CEO Eric Van Zele said that Q210 “Must have been our best quarter ever.”  Van Zele also said that Barco is “experiencing explosive growth in demand for our digital cinema projectors and are working very hard to deal with the supply chain issues this creates.”

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Storage vendor Isilon also reported their Q2 numbers this week, and they were pretty good.  The company’s Q2 revenues of $45.1m represented increases of 15% q/q and 56% y/y respectively. The company also had positive net income in the quarter.  Shares jumped 18% on the news.  With Isilon apparently firing on all cylinders and Omneon now part of Harmonic, the storage space is going to be interesting to watch over the next year or so.

IPTV provider KIT Digital published strong preliminary results for their Q2.  In an upbeat press release, the company said that its Q2 revenues of “at least $22.7m” were up by more than 110%.  The company also said that its EBITDA for the quarter would be at least $4 Million

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Broadcaster and Platform Operator Earnings:

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Broadcaster LIN TV reported 2Q revenues of 99.5m, which represents a 21% y/y increase.  The company’s earnings release highlighted the fact that digital revenues were up by 44% y/y, and that political revenues more than doubled versus last year.  Lin President and CEO Vincent Sadusky said: “Our results demonstrate continued, sustained improvement over 2009. Television advertising has experienced a strong recovery and our digital business, which now constitutes 15% of our total revenues, continues to grow and differentiate us as a local multimedia company.”

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According to industry website TVNewswCheck, The McGraw-Hill Companies reported that its Broadcasting Group’s revenue grew by 24% to $25.3 million in the second quarter compared to the same period last year. Increases in national, local and political advertising all contributed to the improved performance.  The company as a whole reported net income for the second quarter of 2010 increased by 16.4%, or $27.0 million, to $191.1 million. Revenue in the second quarter was up 0.6% to $1.5 billion.

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Media General reported that the company’s broadcast revenue rose 13% in the second quarter, driven by increases in automotive and political advertising (publishing revenues fell by 7%). The company’s digital revenues rose by 8% during the quarter.  The company issued upbeat guidance for its broadcast properties saying, that “Broadcast revenues in the third quarter are expected to increase more than 20 percent, mostly reflecting significant Political revenues.”

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Finally, DVD rental and streaming video provider Netflix reported its Q2 results this week.  Although the company’s subscriber, revenue and net income numbers all numbers increased, it was not enough for investors who were looking for higher sales revenues.  The stock tanked.

For more on Netflix, check out the take from website VideoNuze, who penned an interesting post called 5 Key Takeaways from Netflix’s Q2 ’10 Results.

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Broadcast M&A

Echolab Rumors Continue

Since Echolab was suddenly put into liquidation, there has been great speculation about what would happen to the company’s IPR – particularly the Atem production switcher line up.  Well if rumors are to be believed, Blackmagic Designs is set to announce that they have purchased the assets of Echolab.  This is information is not confirmed, but I have spoken to several people about it.  

As many know, Blackmagic made headlines earlier this year when they purchased color correction specialist Da Vinci.    Coincidentally, TVB Europe just published an article about how Blackmagic took Da Vinci’s $200,000+ products into a sub-$1,000 product for the Mac and kept all the functionality.   If this rumor is true, it will certainly be interesting to see what Blackmagic has in store for Echolab’s Atem product line.  Watch this space. 

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Vitec Multimedia (not to be confused with the Vitec Group) announced the purchase of the Focus Enhancements’ Systems Group.  In the press release announcing the deal, Philippe Wetzel, CEO of VITEC Multimedia said “In combination with our recent acquisition of Optibase, this acquisition furthers our objective to provide a complete line of advanced digital video solutions to our customers around the globe. With innovation at its core, the VITEC R&D division — now with more than 100 esteemed engineers — is uniquely positioned to deliver innovative solutions for a wide range of advanced digital video applications — managing the entire video process from source to display.

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Vizrt announced that it has completed the acquisition of Adactus by buying the additional 71% of the company that it did not already own

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Other Broadcast Technology Vendor News

Vizrt’s Chief Commercial Officer appears to have left the company.  According to a press release from online gaming firm 888, David Zerah has become the managing director of Dragonfish.  While at Vizrt Zerah spent seven years as EVP of worldwide sales before becoming CCO.  Vizrt has not yet announced a replacement.

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3D News

The official IBC blog had an interesting entry on 3DTV the other day, which says that 3D will probably only impact the industry in “small dimensions”.

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OTT Video News

As mentioned above, Netflix reported their Q2 revenues.

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NewTeeVee Reports that Redbox readying a streaming offering.  Streaming media expert Dan Rayburn says Redbox Won’t Challenge Netflix’s Streaming Service, Here’s Why

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Digital Cinema

According to the Wall Street Journal, Imax has signed an exclusive 2-year deal with privately held Laser Light Engines. The company says that the resulting laser-power projectors will deliver brighter images for digital cinema, which will be especially beneficial for 3D.

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3D News – RealD Goes Public

3D provider RealD went public this week in a $200m IPO, which raised 33% more than expected, a testament to the strong interest in all things 3D.  The company’s shares were up 22% on its first day as a public company.

The company’s 100+ page IPO documents are worth reading for an overview of the company’s financials as well as the state of the 3D and Digital Cinema Markets.  Files 100+ Page IPO Doc. Worth Reading for Financials and #3D Industry Overview. #3DTV #Broadcast http://bit.ly/bCanRM

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Market Research Note of the Week – Quality Rankings of Broadcast Technology Vendors

This article looks at how a global sample of several thousand broadcast professionals ranked broadcast technology vendors for one of the most important metrics for any technology company: quality.

The broadcast industry prides itself on the fidelity of its sound and images, so the perception of quality is a very important metric for broadcast technology vendors. Many vendors use quality as one of the key components of their market positioning.

To determine the market’s perception of the quality of broadcast technology vendors, respondents to the 2010 Big Broadcast Survey were asked to rank broadcast technology vendor brands for “quality” on a scale of one to 10, with 10 being best in the market and one being the worst.

As with the top 30 innovation rankings published earlier, this list contains a broad mix of vendors including both audio and video companies. There are also interesting similarities and differences in terms of the types of products produced, geographic location and company.

To read the full article, including analysis of the findings, click here http://bit.ly/cY2nZO

Devoncroft Digest — June 27, 2010

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor Brand Research, Devoncroft Digest | Posted by Joe Zaller
Jun 27 2010

Here’s a recap of some of the items that caught my eye over the past week or so.

Broadcast Technology Vendor News

Another M&A Deal — RGB Buys Ripcode

In a multi-platform, multi-format world, video transcoding is one of the technologies that everyone needs.  But transcoding is a tough business with fierce competition, and it’s considered by many to be a commodity product.  This makes it tough for pure-play transcoding vendors (which is why most of them will tell you that they focus on workflow optimization).  All of the above makes it an interesting market to watch, so I took note when I read that Ripcode has been purchased by RGB networks. I always thought Ripcode was a pretty interesting company.  They raised a lot of money for their platform and they had a different approach to others in the market.  It will be interesting to see how they perform as part of RGB. 

To read more about this, check out Dan Rayburn’a Business of Video Blog, which has complete coverage of the deal here.

 

Evertz Delivers Good Results for Q4 and Full Year

Evertz Technologies delivered pretty good results for their Q4 and full year, topping the expectations of equity analysts. 

Here are some highlights from the company’s earnings press release here.

Revenue for Q4 was C$75.3m, down 3% versus the same period a year ago, but up 14% over the previous quarter.

In terms of geographic split, sales in Q4 from the US and Canada decreased by 28% versus the same period last year, but this was partially offset by a 41% y/y increase in international revenue (which Evertz defines as markets outside of the US and Canada).  International revenue rose by 23% versus the previous quarter, while sales in the US and Canada decreased by 28%.

Revenue for the full year was C$286.5, a 9% y/y decline. 

Annual revenue from the US and Canada declined 26% versus last year, while international revenue was up by 24% over last year.

The company’s gross margins slipped a bit to 58% (versus 61% last year).  On the earnings conference call, the company attributed this to pricing pressures and the cost of international expansion.

Overall, this was a strong performance from Evertz.  The company’s international growth is particularly notable. 

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Wegener Issues Preliminary Results

Wegener, which was delisted from the NASDAQ earlier this year, issued preliminary operating results for the third quarter ended May 28, 2010. Final results for the third quarter of fiscal 2010 will be released on July 12, 2010.

According to the company’s press release  preliminary operating results for the third quarter of fiscal 2010 were revenues of $2.1 million and a net loss of approximately $(487,000) or $(0.04) per share compared to revenues of $2.9 million and a net loss of $(883,000) or $(0.07) per share for the same period in fiscal 2009.

Company President & CEO Troy Woodbury said that “bookings performance in the third quarter was an improvement over the first and second quarters of fiscal 2010, but there is significant room for improvement.”

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French Employees Protest Grass Valley Sale

TVB reports that nearly 200 Grass Valley employees at the company’s facility in Rennes France went on strike to protest the shutdown of production. Grass Valley, which has been for sale for what seems like forever, is one the broadcast industry’s most storied names. 

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Dolby Opens R&D Center in China

Dolby Labs announced that it’s first “from the ground up” R&D facility outside of the US will be based in China.  In the company’s press release, Dolby VP Mahesh Sundaram said “China is strategically important to Dolby. The establishment of Dolby China’s R&E Center is an important milestone as part of our continued commitment to China and innovation.”  The facility will focus on sound technology.

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Technicolor Opens New Lab in Palo Alto

Meanwhile, French technology provider Technicolor (formerly known as Thomson) has announced that it is planning a new lab in Palto Alto, CA.  The company says the new lab will focus on the personalization of digitally delivered content, and enhance the company’s research skills in content discovery.   The company also says it chose Palo Alto for its proximity to excellent universities and for the potential for interaction within the Silicon Valley technology ecosystem.

 

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Broadcast Technology Vendor Confidence Beginning to Return

According to an article in TVB Europe, the IABM (the association which represents broadcast and media technology suppliers worldwide) has published the results of a new study about industry confidence.  The result — the worst of the recession appears to be over in the broadcast and media technology sector and vendors are feeling increasingly optimistic about the future.

The IABM says that 74% of vendors who participated in their poll are response anticipating better business next year than last, and that 47% of those surveyed are already reporting better order volumes than expected.  However the study also found that the industry is facing strong pricing pressure.

Disclosure: Devoncroft and the IABM partner on market intelligence.

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Other Items of Interest:

TVB reports that the new PricewaterhouseCoopers 2010-14 Global Entertainment and Media Outlook predicts that advertising revenues remain fragile in nature and spending is unlikely to return to former levels, and that by 2014, the U.S. advertising spend is expected to still be 9 percent below its level in 2007.

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NetApp Files 10K with SEC 

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Following April Announcement, John Malone Formally Steps Down as DirecTV Chairman 

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According to Dan Rayburn, here’s the “best article by far” about Google TV: “Google TV: everything you ever wanted to know” – Best article by far on the subject by Engadget. 

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The Wall Street Journal reported that News Corp Want to Buy Rest of BSkyB, but that Sky is holding out for more money.

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Harmonic was upgraded by Merrill Lynch, who say that the Omneon acquisition could be significantly accretive in 2011 

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Cablevision bought Bresnan Communications for $1.4Bn

 

 

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Market Research Note of the Week:

Innovation Rankings of Broadcast Technology Vendors – The Top 30 Globally

In keeping with the theme of top 30 rankings, let’s now turn to one of the most important metrics for any technology company – innovation.

The product side of the film & broadcast industry is driven by technology and innovation.  All vendors strive to create techniques that will make their products stand out from the competition.  Thus innovation is a very important component of the brand image and reputation of vendors in this space.

To find out which broadcast technology vendors are considered to be most highly regarded in terms of innovation, more than 4,000 broadcast industry professionals were  asked to rank broadcast technology vendor brands for “Innovation” on a scale of 1-10 — with 10 being best in the market, and 1 being worst in the market. 

There’s a broad mix of vendors included in these ranking, including both audio and video and audio companies.  There are also interesting similarities and differences in terms of the types of products produced, geographic location and company size.  So let’s look a little deeper into these results….

To see the full results, included three ranking tables and analysis, please follow this link.

You can find other 2010 Big Broadcast Survey (BBS) here:

The Top 30 Broadcast Technology Vendor Brands by Overall Opinion, Ranked, Globally and Regionally

The Top 30 Broadcast Vendor Brands by Net Change in Brand Image.

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