Posts Tagged ‘Ascent Media’

Ascent Media Will Take $1-2 Million Charge When It Shuts Down Systems Integration Business

broadcast technology market research | Posted by Joe Zaller
May 10 2011

Ascent Media, which has sold off its media and broadcast assets over the past year, said in a filing with the Securities and Exchange Commission, that it plans to shut down its systems system integration business and record a restructuring charge of $1 to $2 million.

The news comes a little more than a month after Ascent sent a letter to its partners and suppliers saying that Ascent would closing its systems integration business on or about May 1, 2011.

Here is the information from the SEC filing:

“The Content Services group includes the System Integration business, which provides program management, engineering design, equipment procurement, software integration, construction, installation, maintenance and support services for advanced technical systems for the media and telecommunications industries and other customers.

“In the second quarter of 2011, Ascent Media plans to shut down the System Integration business and record a restructuring charge between $1 to $2 million primarily for abandoned leases under the 2010 Restructuring Plan.

“The Content Services group had historically also included the Content Distribution business, which provided facilities and services necessary to archive, manage, and reformat media assets for distribution, as well as the infrastructure to assemble programming content and to distribute media signals via satellite and terrestrial networks. This business was sold to Encompass Digital Media, Inc. (“Encompass”) in February 2011 and has been treated as a discontinued operation for all periods presented.”

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Related Content:

Ascent Media 10-Q filing with SEC, May 9, 2011

Ascent Media Joins Azcar in Shutting Down Broadcast Systems Integration Business http://bit.ly/eMnoEU

Ascent Media 2010 annual 10-K filing with SEC

Broadcast Systems Integrator Azcar Technologies Ceases Operations

TVB article: Azcar Folds

Broadcast Engineering Article: Systems integrator AZCAR ceases business

Press Release: Ascent Buys Montronic

Ascent Sells Post Business to Deluxe

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Ascent Media Joins Azcar in Shutting Down Broadcast Systems Integration Business

broadcast technology market research | Posted by Joe Zaller
Mar 25 2011

Yesterday broadcast systems integrator Azcar announced that it was shutting down its operations

It turns out that Azcar is not the only broadcast SI shutting its doors.  On the same day that Azcar announced its liquidation, it was revealed that Ascent Media is also closing shutting down its broadcast systems integration business.

This week Ascent Media senior buyer Marlene Lefort sent a letter to Ascent’s partners and suppliers saying that Ascent is closing its systems integration business on or about May 1, 2011.

Here’s the text of the letter:

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 “This letter is to inform you that Ascent Media Systems Integration will be shutting down for business on or about May 1, 2011. We thank you for your support these past years and wish you continued success. If you have any questions or concerns, please feel free to contact me.”

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Ascent’s SI business has struggled in recent years as a result of the recession, which forced many of its customers to delay or cancel projects.

Ascent’s recent 10-K filing with the SEC shows the impact of the recession on the company’s SI business.  On page 32 of the filing, it says:

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Revenue.  In 2010, Content Services revenue decreased by $27,185,000 or 17.6% due to a decrease of $27,474,000 in system integration services as customers reduced their spending on system integration projects, with one customer, Motorola, accounting for $17.0 million of the decease and (ii) a decrease of $1,165,000 due to lower revenues for content distribution and transport services in the United States and Singapore. In 2009, Content Services revenue decreased by $105,754,000 or 40.6% due to (i) a decrease of $95,511,000 in system integration services revenue due to a significant number of large projects in the United States and the United Kingdom in the prior year with one customer, Motorola, accounting for $47.8 million of the decrease, and a decline in system integration projects in 2009 as customers reduced their spending in response to a weaker economic climate, (ii) $7,282,000 due to lower content origination and transport services in the United States and the United Kingdom and (iii) unfavorable changes in foreign currency exchange rates of $3,826,000.”

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Although it’s quite a coincidence that both Azcar and Ascent announced that are shutting their SI operations in the same week, Ascent had previously telegraphed its intention to close the SI business via filings with securities regulators.

In its 10-K filing, Ascent stated its intention to dispose of the systems integration business, saying:  “We are currently exploring opportunities to dispose of the Systems Integration business, which we consider non-core. There can be no assurances that the disposition of the SI business will be completed in the near term and/or on terms favorable to Ascent Media, or on any terms.”

Ascent is in the process of transforming its business.  It recently acquired Montronics, a company that provides security alarm monitoring services: monitoring signals from burglaries, fires and other events, as well as, providing customer service and technical support. Ascent says Montronics has stable and scalable revenues.

To fund the Montronics acquisition, the company shed its broadcast-related interests, and exited the broadcast business altogether.  As part of this process, Ascent has disposed of assets including its:

  • Chiswick Park playout facility in London, which was sold to Discovery Communications for $34.4m
  • Global Media Exchange business, which was classified as discontinued operations in September 2010
  • Creative Services business, which was sold to Deluxe Entertainment for $69m
  • Content Distribution business, which was sold to Encompass Digital Media for $104m

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Unfortunately, it appears that Ascent has been unable to sell its SI business and has been forced to close its doors.

 

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 Related Content:

Ascent Media 2010 annual 10-K filing with SEC

Devoncroft blog post” http://bit.ly/hn6pUn

TVB article: Azcar Folds

Broadcast Engineering Article: Systems integrator AZCAR ceases business

Press Release: Ascent Buys Montronic

Ascent Sells Post Business to Deluxe

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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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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 for the w/e May 21, 2010 – Echolab Liquidates, Earnings Season Continues, Bankers on Broadcast, Google Gets into TV

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
May 23 2010

Devoncroft Digest – Recap of the week ending May 21 2010

It was a busy week in the broadcast & digital media world.  Echolab was forced to liquidate, multiple companies reported their quarterly earnings (which were mainly positive), two investment banking houses published notes on the broadcast industry, and Google made a little announcement about their plans to transform the TV viewing experience.

Here’s a recap of some of the things that caught my attention this week

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Echolab goes into liquidation

Long-established broadcast production switcher vendor Echolab announced via email this week that the company has been put into liquidation by its owner.  Echolab, which has been in business since 1974, had been on the ascendance recently under the leadership of company CEO Nigel Spratling.   

Spratling revamped the company’s product line-up, which culminated in the launch of the Atem production switcher family.  At NAB 2010 Echolab announced that it had signed an OEM deal for the Atem line with the broadcast communications division of Harris (who has now removed the press release about the deal from their website). 

The email from Spratling said the company’s primary investor was no longer prepared to fund the company, and that the news was a great show to everyone.  

Read the full text of Spratling’s email.

 

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Viewcast losses narrow

Streaming technology provider Viewcast announced their results for the first quarter of FY’10. The company’s reported that their losses narrowed. Revenue for the quarter was up slightly versus the previous quarter, but down 13% versus the same period a year ago.  The company also filed an 8K with the SEC this week, detailing the compensation plans of their CEO and CFO.

 

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More Broadcast M&A — Tektronix acquires Mixed Signals 

Test & measurement leader Tektronix announced this week that it is acquiring Mixed Signals, a provider of digital content monitoring including digital services, transport streams, ad insertion, switched digital video and interactive content.

According to said Eben Jenkins, General Manager of the Tektronix Video Business, “The acquisition of Mixed Signals, Inc. brings to Tektronix a strong team that has delivered leading innovation to the video monitoring market. The combination of Mixed Signals and Tektronix accelerates our ability to provide unmatched next-generation video test and monitoring solutions to our customers.”

 

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Continued growth for Ross Video

Privately held Ross Video said in a press release Ross Video that the company had achieved 7% growth in the first half of its fiscal year.  Although private, Ross has been vocal about their success in the face of the economic downturn of the past 18 months.  During the IBC show last September, company CEO David Ross told the IBC Daily News that the company had continued to grow during the recession.  In the most recent press release, Ross says “We continue to buck the downward trend and have enjoyed some record months.”

 

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Vizrt posts operating profit on big revenue gains

Broadcast graphics and asset management vendor Vizrt reported that their revenue grew by 38% in the first quarter of 2010 versus the same period, but fell 9% versus the previous quarter.  The company made an operating profit of $200K during the quarter, versus a loss of 2.4m during the same period a year ago. Company CEO Martin Burkhalter issued an upbeat statement saying that “broadcast markets are slowly recovering and … that CAPEX budgets and discretionary spending are being restored.”  Burkhalter, who recently stepped into the role of CEO after the death of Bjarne Berg concluded by saying “In terms of revenues, we believe that we are heading back towards the levels we achieved prior to the global downturn and anticipate to reach these levels in the coming nine to twelve months.  With this recovery, we expect our profitability to improve as well.”

 

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Autodesk M&E revenue declines by 4%

3D animation leader Autodesk (the parent company of Discreet and others) posted strong revenues for the first quarter of 2010.  In the earnings press release, which breaks out financials by industry segment, the company revealed that revenue for its Media & Entertainment group was $46m in the quarter.  This is basically flat with the previous quarter and represents a 4% decline versus same period a year ago

 

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Trouble at JVC Kenwood

The Wall Street Journal also reported that JVC Kenwood Holdings fell 21% to Y38 on heavy volume after the company’s Friday announcement of its plan to submit a resolution for 1-for-10 reverse stock split at its upcoming shareholders meeting. One brokerage manager, citing past reverse stock split scenarios, said that without fundamental business improvements, it would be hard to expect the company’s stock to show long-term appreciation.

 

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DG FastChannel added to S&P SmallCap 600 index

Standard & Poor’s announced this week that it is adding DG FastChannel to its S&P SmallCap 600 Index.  DG FastChannel, who recently raised $100m in a secondary public offering, has been on a tear recently.  The company’s stock has more than doubled in the last eight months, and it recently reported record results for its first quarter based on increased advertising revenue. 

 

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Ascent Media CEO dies at age 44

Ascent Media this week announced the sad news that Jose Royo, the CEO of the company’s AMG subsidiary had died at age 44.  “José was a thoughtful and caring business leader, mentor, partner, and friend,” said William Fitzgerald, Chief Executive Officer of Ascent Media Corporation. “José played a significant role in the media services industry, where he left an indelible mark. He was truly passionate about Ascent, its customers, and its people. José was a wonderfully devoted husband to his beloved wife, and father to his two young children. Our thoughts and prayers are with them at this difficult time. José will be missed.”

 

 

Google, coming to a TV near you soon?

As covered extensively this week, Google has unveiled a strategy which it believes will transform the TV viewing experience by combining it with the web. The company has partnered with Sony, Intel and Logitech to create a new type of TV experience.  Watch this space.

 

 

TiVo and Technicolor Team Up to Offer Integrated PVR Solution

I have been a big fan of Tivo since buying their very first PVR in 1999 (which still works great, and in my opinion provides a significantly better experience than the alternative from my pay TV provider), so I was interested to see that the company has teamed up with Technicolor (formerly Thomson) for a new set-top box solution.  You can read the details here…

 

 

Two Investment bankers weight in on NAB 2010 and the broadcast space

Two boutique investment banks, Silverwood Partners and Pharus Advisors have recently published notes to clients detailing their impressions of the NAB 2010 show.  Both companies gave me permission to re-publish them here.

Silverwood has been involved in a number of broadcast M&A deals includingBlackmagic / DaVinci and Avid / Euphonix. Prior to the 2010 NAB show the company published, which is worth reading to get their full perspective on the broadcast market.  

Pharus has also been involved in a number of industry transactions including Neural and Virgin Media / Two Way Media. The company published their post-NAB thoughts in their industry newsletter, which also includes a summary of recent M&A transactions in the digital media space, and a comparison of publicly traded companies.

More info on this here…

 

 

3D news

Broadband TV News reports that UK satellite broadcaster BSkyB is bullish on 3D.  An article on the website says that Sky says there could be up to 1m 3D screens in UK by

Speaking of 3D, the Schubin Café website posted a link to an article which says that watching 3D can make you sick. 

 

 

Market Research Note of the Week:

What factors most influence the purchase of broadcast technology products?

Regardless of “how” broadcast technology products are purchased, what many in the industry want to know is “why” they are bought — i.e. what are the most important factors that influence the decision to buy one product over another.

When it comes to selling broadcast technology, there are several strategies that vendors have adopted. This includes positioning their offerings as having the best technology, the best feature set, the lowest cost, the best value, the best service, the most recommended etc.

But which factor is the most important to the most buyers?

To find out we asked several thousand broadcast professionals around the world what is most important to them when buying broadcast technology products.

You can see the results, including a chart that ranks 10 different factors that influence the purchase of broadcast technology products here…

Devoncroft Digest – Week Ending May 7th 2010 — Broadcasters Earnings Improving, Will it Lead to Increased Capex? Vendors Report Mixed Earnings. Harmonic Buys Omneon.

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
May 09 2010

There was a lot of action last week.  Earnings season continued with several broadcasters, broadcast service providers and broadcast technology vendors reporting their numbers. 

There was also a big broadcast M&A deal announced, with Harmonic scooping up Omneon for $274m in cash and stock.

Earnings of Broadcasters and Broadcast Service Providers

A number of broadcasters and broadcast service providers reported their quarterly earnings this week.  For the most part, the news was positive with revenue and profits improving thanks to an improvement in the advertising environment.

News Corp posted strong numbers for its Q3, with revenue growth of 19% versus the previous year.  However revenues from satellite broadcasting declined.

Sinclair Broadcast Group announced that their Q1 revenue increased 12.7% versus the prior year period.  Sinclair reported that political advertising had increased sharply, and that 8 of its top 10 advertising categories were up in the quarter – with automotive up 35.6%, and services up 10.1%.  Sinclair gave a positive outlook for their Q2 and also said that they expect their capex to be $19m in 2010, including $8m in the current quarter.

TVB reported that Belo’s revenue increased 15.6% in the first quarter. Like Sinclair, Belo’s results  including a big jump in political revenue.

Liberty Media announced positive Q1 results, lifted by a strong performance at QVC.

Revenue at Cablevision grew 5.2%, but income more than doubled.  According to the Motley Fool website, the company’s “telecommunications services – which includes basic video, interactive optimum video, high-speed data, and voice, along with commercial data and voice service and the programming segment — chalked up a 20.6% growth in operating income. Keeping in step with its cable brethren, the company also posted a 35.1% jump in cable advertising.”

Ascent Media did not fare as well in their first quarter.  The company posted a loss of $11.1m as its revenues declined by 9% versus the previous year. Nevertheless the company’s earnings press release was relatively optimistic, noting that as advertising markets improve the company has been involved in the creation of “more than 800 television commercials and a substantial number of this year’s episodic television pilots…[and] are currently working on a solid pipeline of 3D features. Ascent CEO William Fitzgerald  said the company is “beginning to see stabilization in the global advertising and media markets.”

  

  

Broadcast Technology Vendor Financial Results

Several reported earning this week, including Miranda, DG FastChannel, Chyron, QuStream and Harmonic. 

Broadcast technology vendor results were mixed, with DG FastChannel, Harmonic and Chyron posting increases in revenue, while Miranda and QuStream fared less well.

 

DG FastChannel reported record Q1 results which the company’s CEO Scott Ginsburg attributed “Stellar growth in both traditional and online advertising, the continued adoption of the high definition (HD) advertising format, and the advent of a hotly contested year in politics.” The company’s revenue increased by 31% versus the same period last year, and EBIT increase by 71% y/y.  Investors liked the news and sent the company’s shares more than 12% higher following the announcement.

  

Harmonic announced strong Q1 results that saw revenues climb by 25% versus the previous year,  The company achieved a net income of $5.3m versus $18.8m loss last year.  The company also announced that it has agreed to acquire 100% of Omneon (see below).

Broadcast graphics provider Chyron said its revenue increased by 10% versus the same period last year, and that its service revenue accounted for 33% of total.  Nevertheless the company posted a net loss of $.7m during the period.  In Chyron’s earnings press release, company CEO Michael Wellesley-Wesley said he expects revenue and earnings to climb in 2010.  

Broadcast infrastructure provider Miranda Technologies reported first quarter results that were below the expectations of equity analysts.  The company’s revenues were down 13% versus the same quarter last year, and 19% versus the previous quarter. Revenue from the US market was down 50% y/y, while revenue from Canada and international markets both rose sharply.  In the company’s press release, Miranda CEO Strath Goodship said: “We continue to believe that broadcast markets have stabilized, however the timing and strength of a rebound remains uncertain. Sales momentum in International markets continues to build and we are seeing signs of a broad based recovery. Sales activity in North American markets, particularly the USA remains constrained, although we are hopeful the heightened product interest seen at NAB will translate into stronger revenues in these markets going forward. The new products introduced at NAB, along with a number of sporting and political events in 2010 should help drive revenues and position us for growth.”

Routing switcher and pro-AV vendor QuStream (Pesa) posted a net loss $1m.  Sales for the quarter were $1.7m, a decline of 29% versus the same period a year ago.

  

 

Harmonic Buys Omneon

In addition to announcing pretty good numbers for Q1, Harmonic also announced that it has signed a definitive agreement to acquire 100% of broadcast server and storage vendor Omneon.

Much of the Harmonic conference call was dedicated to the acquisition, and Omneon CEO Suresh Vasudevan presented the company to analysts (many of whom were clearly unfamiliar with Omneon and its business).  Here is a link to the replay of the Harmonic earnings conference call, which provides details of the Omneon acquisition   You can also read a transcript of the call here.

I spoke to Omneon SVP Geoff Stedman minutes after the announcement was made public.  He told me that the deal grew out of partnership talks that Omneon and Harmonic had started more than a year ago.  Stedman also said that the Omneon name will continue for the foreseeable future, with Omneon CEO Vasudevan becoming the president of the Omneon division of Harmonic.  Much of Omneon’s key leadership team will also remain in place, and continue to report to Vasudevan, who will report to Harmonic CEO Patrick Harshman.  In my view, this is a good move.  Omneon has a strong, execution-oriented executive team who understands their market well – and there is a very, very big difference between the cable / satellite market (where Harmonic plays) and the broadcast market where Omneon plays.

According to the press release, Harmonic agreed to pay $274m for Omneon.  Investors did not immediately warm to the deal… the AP reported that, Harmonic’s shares plummeted 19% following the announcement of the deal.

 

 

Other

Finally, broadcast business management specialist VCI Solutions has appointed Robert Furlong as its new president & CEO.  Furlong is an industry veteran and former VCI customer.  He has been a TV station GM with both Freedom and Meredith

 

 

Market Research Note of the Week:

How are broadcast technology products typically purchased – Direct from vendor, SI or dealer?

As part of the 2010 Big Broadcast Survey I asked several thousand technology buyers (including broadcasters, playout centers, cable/satellite/IPTV operators, education, film studios etc) in 120+ countries how they typically buy broadcast technology products – direct from a vendor; through a systems integrator; through a dealer; or some other way.

It turns out that there is considerable variation in the way broadcast technology products are purchased, with each category of buyer exhibiting different purchasing preferences. 

These results help readers to better understand the channel structure in the broadcast market.  They are interesting because they highlight that there are some times when it makes more sense for vendors to use a channel than go direct.  They also show that there are some types of buyers who are more used to buying through the channel versus direct.

To see the results, including a chart that breaks responses down by company type, please click here.

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