Posts Tagged ‘Broadcast Vendor M&A’

ChyronHego Taken Private by PE Firm, Delisted from NASDAQ

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

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

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

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

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

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

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

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

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

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

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

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

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

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

.

.

Related Content:

Press Release: Vector Capital Completes Acquisition of ChyronHego

Certificate of Merger

ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

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

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

Thorsteinson Replaces Cross as CEO of Quantel and Snell

Analysis, Broadcast technology vendor financials, Broadcast Vendor M&A, Broadcaster Financial Results | Posted by Joe Zaller
Mar 04 2015

Quantel and Snell announced that Tim Thorsteinson has replaced Ray Cross as CEO, effective immediately.news_Tim_Thorsteinson

According to the company, Thorsteinson “is the ideal individual to lead the next stage in the development of the combined Quantel and Snell.”

Cross, who had been CEO of both Quantel and Snell since March 2014, when it was announced that Quantel had acquired fellow UK-based broadcast technology vendor Snell, a deal that had been long-rumored in the industry, since the two companies already had a common parent, Lloyds Development Capital (LDC), the investment arm of Lloyds Bank.

Previously, Cross had been CEO of Quantel since December 2005.

At the time of the Quantel-Snell deal, the company said in a statement that the combined entity had revenue of more than $170 million and office in 16 locations around the globe, making it one of the larger vendors in the broadcast industry.  The company has not provided an update on its performance since that time.

It will be interesting to see what moves Thorsteinson, a longstanding broadcast industry executive, will make as CEO of Snell and Quantel, companies he has competed against in previous roles.

Thorsteinson is a well-known figure in the broadcast industry having headed-up several of the industry’s largest technology vendors over the past 15 years.

In January 2013, Thorsteinson was named CEO of Grass Valley, replacing Alain Andreoli, who had been appointed by private equity firm Francisco Partners following their 2010 acquisition of Grass Valley from Technicolor.

Just over a year later, Thorsteinson oversaw the $220m sale of Grass Valley to Belden Corporation, who combined it with Miranda, keeping the Grass Valley moniker for the enlarged entity.

Interestingly, Thorsteinson was also involved in the sale of Miranda to Belden.  In April 2012, he appointed a director of Miranda Technologies during the time that activist investor JEC Capital was agitating for a sale of that business.  Three months after Thorsteinson became a director of the company, Belden Corporation acquired Miranda for an enterprise value of $356m.

Thorsteinson was the President of Harris Corporation’s Broadcast Communications Division from 2006-2010.  He was appointed to this role following the $460m purchase by Harris of Leitch Technology Corporation, where Thorsteinson had been CEO since November 2003.

Prior to Leitch, Thorsteinson was CEO of Grass Valley Group, and oversaw the December 2001 sale of Grass Valley Group to Thomson Multimedia for $172m.

“We are delighted to have Tim Thorsteinson join Quantel to continue the company’s transformation. Tim has a proven track record of value creation, and his knowledge and experience are a great fit to grow the combined Quantel and Snell business into a major force in the rapidly changing broadcast industry,” said Chris Hurley, Managing Director Lloyds Development Capital and Quantel Board Director. “I would also like to thank Ray for all his hard work and achievements at Quantel over the past 10 years.”

“I’m very excited to be joining Quantel,” said Thorsteinson. “It is one of the larger independent businesses in our industry, with world class products and a rich history of innovation. I want to build on that tradition to create an organization 100% focused on helping our customers prosper in the media technology world.”

.

.

 

Related Content:

Press Release: Tim Thorsteinson becomes Quantel CEO

Broadcast Vendor M&A: Quantel Acquires Snell

Press Release: Quantel acquires Snell to create new force in media technology

Quantel – Snell FAQ

Belden Makes it Official – Combination of Grass Valley and Miranda to be Called Grass Valley

Broadcast Vendor M&A: Belden Completes Acquisition of Grass Valley, Will Invest $25 Million in Integration of Combined Business

Broadcast Vendor M&A: Belden Buys Grass Valley for $220 Million

Belden Closes Deal to Acquire Miranda

Thorsteinson Appointed to Miranda’s Board of Directors in Otherwise Uneventful AGM

Miranda Nominates Tim Thorsteinson as Director

Activist Shareholder Drama Continues at Miranda Technologies

Technicolor Receives a Binding Offer from Francisco Partners for Grass Valley Broadcast Business

Press Release: Tim Thorsteinson Named President of Harris Corporation’s Broadcast Communications Division

Press Release: Harris Corporation Completes Acquisition of Leitch Technology

WSJ Article: Thomson Multimedia to Buy Grass Valley for $172 Million

Broadcast Vendor M&A: Belden Buys Grass Valley for $220 Million

Belden’s Acquisition of Miranda to Close on or Before July 27, 2012

TVNewsCheck Article (9-29-2011): Tech One-on-One With Simon Derry — Snell Aims To Master the U.S. Market

Advent Venture and LDC close £72m broadcasting merger

Advent Venture Partners and LDC Complete Their Portfolios Merger – March 9, 2009

Video: Pro-Bel and Snell & Wilcox CEOs Discuss Merger (2009)

Press Release (11-6-2003): Chyron Sells Pro-Bel to LDC

Broadcast Magazine (2002): Snell Secures £22m from Advent

Press Release (2002) Advent Venture Partners invests GBP13m in Snell & Wilcox

Variety Article (7-14-2000): Carlton sells tech arm Quantel to LDC for £51 million 

 

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

NeuLion Revenue Increases 17 Percent in Q4 2014

Annual Results, Broadcaster Financial Results | Posted by Joe Zaller
Mar 04 2015

NeuLion,_Inc_-729822400065

Online video platform provider NeuLion reported that its revenue for the fourth quarter of 2014 was $16.5m, an increase of 17% versus the same period a year ago, and up 32% versus the previous quarter.

Consolidated net income for the quarter was $1.6m, or $0.01 per basic and diluted share, an increase of up from $1.1m last year, and $0.2m last quarter.

Operating income for the quarter was $1.8m, up from $1.1m last year, and $0.2m last quarter

Company CEO Kanaan Jemili said the NeiLion’s improved performance for the quarter reflects the company’s “continued gains in volume and usage from new and existing customers and demonstrating the earnings power of our business model.”

 

On a segment basis:

  • Revenue from Pro Sports was $7.9m, an increase of 18% versus the same period a year ago, and an increase of 52% versus the previous quarter. The company attributed the year-over-year increase in pro sports revenue to growth in variable subscription fees.
  • College Sports revenue was $3.6m, down 8% versus the same period a year ago, up 16.1% versus the previous quarter. The company attributed the year-over-year decline college sports revenue to the loss of the company’s ability to sell subscriptions for certain colleges, as colleges move to consolidate into conferences and sports networks
  • Revenue from TV Everywhere was $5m, up 43% versus the same period a year ago, and up 47.1% versus the previous quarter.  The company said TV Everywhere revenue increased because of increases in monthly fixed fees and variable usage fees.

 

Expenses during the quarter were up across the board.  Selling, general and administrative expenses, including stock-based compensation, were $8m, an increase of 27%, versus the same period a year ago. Including in selling, general and administrative costs were approximately $0.8 million of acquisition-related expenses and $0.2 million in costs associated with compliance with Section 404 of the Sarbanes-Oxley Act.

Research and development expenses in the fourth quarter were $2.1m, an increase of 5%, compared to the fourth quarter of 2013.

 

Full year 2014 Results

NeuLion’s revenue for the full year 2014 was $55.5m, up 18% versus the previous year.

Consolidated net income for the full year 2014 was $3.6m, or $0.01 per basic and diluted share, compared to a net loss of $2.3m in 2013.

Full year 2014 operating income for the quarter was $3.5m, versus an operating loss of $1.6m in 2013.

 

NeuLion CEO Kanaan Jemili said the company’s improved performance for the quarter reflects the company’s “continued gains in volume and usage from new and existing customers and demonstrating the earnings power of our business model.”

“With the acquisition of DivX, we have entered 2015 excited about our expanded set of opportunities globally to continue scaling the business and to seize leadership from both a technology platform and consumer experience perspective in the fast-growing online video market,” added Dr. Jemili. “We are intently focused on enlarging our customer base of both sports and entertainment content owners and consumer electronics manufacturers while continuing to expand relationships with our established customers. As adoption of ultra HD/4K video and Over-the-Top services accelerates, our end-to-end solution offerings, which enable digital content management, distribution and monetization, perfectly position NeuLion to deliver high quality on-demand and live interactive digital content anywhere, on any device,” concluded Dr. Jemili.

.

.

Related Content:

Press Release: NeuLion Reports 22% Year-Over-Year Increase in Third Quarter Revenue to $12.2 Million

NeuLion Completes Acquisition of DivX

Broadcast Vendor M&A: Rovi Sells DivX and MainConcept to Parallax Capital and StepStone Group for $75 Million

Rovi – Parallax Capital: DivX Purchase Agreement

Press Release: Rovi Announces Sale of DivX and MainConcept Businesses

Press Release: Parallax Capital Partners and StepStone Group to Acquire DivX

Rovi to buy Sonic for $720 million

Sonic Solutions to buy DivX in $323M bid to become digital media leader

Sonic Solutions Integrates Newly Acquired MainConcept, Forms New Pro Technology Division

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

Analysis, Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Feb 27 2015

ChyronHego_Logo

In November 2014 broadcast graphics specialist ChyronHego entered into a definitive agreement to be taken private by Vector Capital in an all-cash deal that valued ChyronHego at an equity value of approximately $114m, or $2.82 per share.

Shortly thereafter, six lawsuits challenging the proposed acquisition of the company were filed in the Supreme Court of the State of New York, which were subsequently consolidated into a single case.

The consolidated case alleges that the company’s directors “breached their fiduciary obligations in connection with their approval of the Merger Agreement by entering into a transaction that is coercive and constitutes an unfair and inequitable subversion of shareholders’ rights, and that the entity defendants aided and abetted those breaches.”

ChyronHego and Vector Capital recently entered into a memorandum of understanding (MOU) with respect to a proposed settlement of case, and agreed to provide more information relating to the proposed deal to take ChyronHego private.

According to a recent filing with securities regulators, ChyronHego has now disclosed additional information regarding the proposed deal, including the following:

  • Beginning in November 2013, ChyronHego’s board authorized ChyronHego’s President and Chief Executive Officer Johan Apel to explore ChyronHego’s strategic alternatives

 

  • ChyronHego and Vector Capital entered into a confidentiality agreement in February 2014

 

  • Discussions on the potential of ChryonHego’s management rolling over equity as part of the transaction did not occur with certain other interested parties.

 

  • During a Special Committee (consisting of Independent ChyronHego Directors) meeting in July 2014, the Company’s bankers were informed “Mr. Apel was not happy being the Chief Executive Officer of a publicly traded company.”

 

  • During the “go-shop period,” ChyronHego executives met with two interested parties, neither of which decided to make an offer

 

  • Additional information was provided on the valuation metrics used in the Company’s analysis of the purchase price offered by Vector.

 

 

Excerpts from ChyronHego Definitive Proxy Statement

The broader proxy statement is a lengthy read covering the historical events leading to the proposed transaction, ChyronHego’s rationale for entering the transaction, and additional information on the perspective of the board and management.

Several excerpts are worth highlighting:

  • Since November 2014, ChyronHego’s investment bankers contacted 85 potential buyers: 20 strategic buyers and 65 private equity buyers. Only nine potential buyers entered into confidentiality agreements to review more detailed materials.  None submitted bids for ChyronHego

 

  • In considering the merger, ChyronHego’s board noted the “significant increase in competition in competition in the broadcast graphics creation, playout and real-time data visualization industry over the past two years, which had led in some instances to pricing pressure and discounting on ChyronHego’s products and services, and consistent competition for clients and customers with other companies, such as Vizrt, that were increasingly well-capitalized.”

 

  • The board had concerns on ChyronHego’s access to capital as a small, public company. “Members of the Board believed, based on their experience with the capital markets, that issuers with small market capitalizations and insignificant levels of coverage by investment analysts generally have a more difficult time raising meaningful amounts capital on terms that are not punitively dilutive to their shareholders.”

 

  • ChyronHego provided the following financial projections to Vector Capital:

 

ChyronHego Projections to Vector

 

  • Financing for the transaction will include a rollover of existing management shares in an aggregate value of $23.3 million, an equity contribution by Vector Capital of $49.3 million, a $50 million senior secured loan, and an up to $7 million of senior secured revolving credit loan.

 

 

Thoughts on Transaction

Taken together the disclosures outline a lengthy and thorough process run by ChyronHego’s board and management to seek a buyer or other strategic alternative for the company.

On the question of valuation, the market has spoken.  As a reference, the transaction values ChyronHego at 19.2X LTM (last twelve months) EBITDA and 1.8x LTM revenue. A review of the public disclosures referenced above offers sensible statements by the board and management on concerns of access to greater resources, competitive positioning, and disadvantages of remaining public.

However, shareholder frustration is understandable given the proposed take-private price per share is lower than the 52-week high stock price.

Moreover, the company had previously communicated growth levels and market sizing estimates inconsistent with observable data points in the broadcast technology sector.

For example, the chart below is from ChyronHego’s March 2014 investor presentation, which was still on the company’s website at the time of writing, implies that company believes its addressable market is more than $1 billion.

 

ChyronHego TAM Estimate from 3-14 Investor Presentation

 

On ChyronHego’s Q2 2014 earnings call, CEO Johan Apel confirmed management’s view that the total addressable market was approximately $1 billion, comprised of $250m of broadcast graphics products, and $750m of services. This reiterated estimates made by previous management about the company’s addressable market on its Q2 2008, Q4 2011, and Q2 2012 earnings calls.

However, it is reasonable to conclude ChyronHego was in the process of communicating updated expectations of growth and market sizing.  To their credit, management had already reversed ground and communicated the need to seek other approaches to generate increased in shareholder value.  This led to a series of M&A transactions responsible for substantial all of ChyronHego’s recent growth.

Shareholders will vote on the proposed take-private deal at a special meeting of the company, which is scheduled to be held on March 6, 2015.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14m. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.  For the trailing twelve months (TTM) ended September 30, 2014, ChyronHego had revenue of $58m, comprised of $27.2m of product revenue and $30.8m of service revenue

Assuming the transaction closes, it will be interesting to track developments of ChyronHego with its new owners Vector Capital.

.

.

Related Content:

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

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

Vitec Group Broadcast Revenue Up 6.3 Percent in 2014; Changes Reporting Structure to Focus on Core Businesses

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Feb 26 2015

The Vitec Group, which owns more than a dozen brands in the broadcast industry as well as technical services company Bexel, announced that its total for the full year 2014 was £309.6m, a decline of 1.8% versus 2013.

Operating profit was £38.8m, a decline of 1.8% versus last year.  On a constant currency basis, however revenue increased 3.3% and operating profit increased 7.4%.

 

Changes to Financial Reporting Structure Reflects Focus on Core Businesses

Vitec has about a dozen brands that serve various parts of the broadcast industry, including Anton/Bauer, Autocue, Autoscript, Bexel, Camera Corps, The Camera Store, Litepanels, OConnor, Petrol Bags, Sachtler, Teradek, SmallHD, Vinten and Vinten Radamec.

During 2014, Vitec divested its IMT wireless communications and microwave business, which included the IMT, Nucomm, and RF Central brands.

Historically, Vitec reported its broadcast-centric activities through its Videocom and Services divisions, but following the sale of IMT, the company has changed its financial reporting structure, starting with the release of its full year 2014 results. Vitec now reports its broadcast revenue through its newly named “Broadcast Division,” which it further breaks out as “Broadcast Equipment” and “Broadcast Services.”

According to the company this new reporting structure more appropriately describes its core operating businesses. “Following our exit from the loss-making IMT business we are focused on our core Broadcast and Photographic markets supplemented with selective value-adding acquisitions,” said Vitec CEO Stephen Bird.

 

Vitec Broadcast Division

As shown in the chart below, Vitec’s Broadcast Division had revenue of £171.1m in 2014, an increase of 6.3% versus 2013 (up 11.9% on constant currency basis).


Vitec Broadcast Division Revenue FY 2014

 

 

2014 Broadcast Division Operating profit for 2014 was £21.1m, an increase of 9.3% versus 2013’s results (16.6% on constant currency basis).  Operating profit for 2014 would have been negatively impacted by £1.8m had IMT’s results been included.

“Our Broadcast Division performed well in a variable market including a strong performance from Teradek, acquired in the second half of 2013,” said Bird. “We also benefited in 2014 from contracts to support the Sochi Winter Olympics and the FIFA World Cup. Our premium product and service offering was further strengthened through the acquisitions of Autocue, the specialty camera assets of SIS, and more recently SmallHD.”

 

 

Broadcast Equipment

The Broadcast Equipment business (excluding IMT) had 2014 revenues of £131.9m, an increase of 1.6% (7.0% on constant currency) versus 2013.

Vitec Broadcast Wquipment and Broadcast Services Revenue FY 2014

 

Vitec made three acquisitions during 2014, which are now reported in the Broadcast Equipment business:

  • The specialty camera assets of SIS Outside Broadcasts Limited (integrated into Vitec’s Camera Corps business)

 

  • Autocue, a well-known provider of teleprompters (now combined with Vitec’s Autoscript business)

 

  • SmallHD, a provider of high definition on-camera field monitors

 

The combination of currency fluctuations, and the inorganic contributions from these acquisitions accounted for all the growth in the Broadcast Equipment business.  On an organic constant currency basis, Broadcast Equipment revenue in 2014 was declined by 2.2% versus the previous year.

Broadcast Equipment operating profit was £18.8m in 2014, an increase of 5.0% (12.3% on a constant currency basis) over 2013.

Operating margin for Broadcast Equipment was 14.3% a slight improvement from the 2013 margin of 13.8%.

The company said that a lower level of investment by studios in larger camera supports had impacted its business, but that this was offset by smaller camera support products performing in line with expectations.

The Anton-Bauer battery business had lower revenue, but is expected to benefit from new ranges of products launched in 2014.

Although Vitec did not specifically break out the performance of Teradek, it did disclose that “contingent consideration of £4.2 million ($7.0 million) was accrued during the year to be paid to the previous owners of Teradek in 2015 in relation to the business’s performance in 2014 and is subject to final agreement. The business has delivered strong growth in the year and has performed ahead of our pre-acquisition expectations.”

Vitec offered Broadcast Division results excluding the performance of the IMT business.  IMT had recorded an operating loss of £1.3m in 2014 on revenue of £7.9 million.  IMT had breakeven results in 2013 on revenue of £14.0m.

 

Broadcast Services

The Broadcast Services generated revenue of £39.2m in 2014, an increase of 26.0% (32.9% on a constant currency basis) versus 2013.  2014 operating profit for Broadcast Services was £2.4m, equating to an operating margin of 6.1%.  This compares favorably to the operating profit of £1.5m in 2013 (4.8% operating margin).

Management attributed the strong performance of the Broadcast Services segment to major events in 2014 including the Sochi Winter Olympics and the FIFA World Cup, along with a rise in the underlying rentals business for other major events. The company also cited participation in a number of improvements in the infrastructure of NFL stadiums including player positioning systems.

It is interesting to review the capital expenditure requirements of the Broadcast Services business.

Broadcast Services spent £12.7m on rental assets in 2014.  This constitutes the majority Vitec’s capital expenditures as a company, which totaled £17.5 million excluding capitalization of software development costs.  Broadcast Services capital expenditures are partially financed by proceeds from the sale of certain rental assets.  These sales amounted to £5m in 2014.  Thus, total net capital expenditures were £6.7m for Broadcast Services.  This £6.7m cash outflow is in the context of a £3.8m operating cash inflow generated by the segment.

There is additional strategic rationale in Broadcast Services, which was noted in the Company’s release. Management stated the Broadcast Services business “enables Vitec to closely monitor changes in technology and to showcase our products.”

.

.

 

Related Content:

Press Release: The Vitec Group plc, 2014 Full Year Results

Vitec Group 1H 2014 Results: Videocom Down 1%, Bexel up 39.9%

Broadcast Vendor M&A: Vitec Group Buys SmallHD for up to $30 Million in Cash

Vitec Group Announces Intention to Divest IMT Wireless Communications and Microwave Business

Broadcast Vendor M&A: Vitec Buys Teradek for $15 Million

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

Vizrt Posts 16% Revenue Growth in 2014, Provides Update on Pending $374 Million “Going Private” Deal

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Feb 26 2015

Broadcast graphics MAM specialist Vizrt reported strong results for the fourth quarter and full year 2014.

The company also provided an update on the pending $374 million all-cash deal with Nordic Capital to take the company private.

For the fourth quarter of 2014 revenue was $36.2 million, an increase of 9% versus the fourth quarter in 2013, and an increase of 2.8% versus the preceding quarter, Q3 2014.

Gross margins for Q4 2014 were 71%, which compares favorably to the 69% margins recorded during Q4 2013 and is consistent with the 71% gross margins from the preceding quarter.

Operating expenses for the quarter were $17.9 million.  This represents a 9% increase when compared to the fourth quarter of 2013 and is flat versus the preceding quarter.

  • R&D expenses in the quarter were $5.5m (15.1% of revenue), down 1% versus the same period ago, and down 4% versus the previous quarter

 

  • Sales and marketing expenses in the quarter were $8.5m (23.6% of revenue), up 7% against the year earlier period and down 5% versus the Q3 2014

 

  • General and administrative expenses in the quarter were $3.8m (10.7% of revenue), up 31% versus the same period a year ago, and up 18% versus the preceding quarter

 

EBITDA was $7.8 million for the quarter, up 357% from $1.7 million during the fourth quarter of 2013, and up 9% from $7.2 million in the previous quarter.  The EBITDA margin for the quarter was 22% versus an EBITDA margin of 5% during the comparable quarter last year and 21% during the third quarter of 2014.

Net profit for the quarter was $4.5 million, compared to a net loss of $3.4 million last year, and down slightly versus last quarter’s net profit of $5.2 million.

 

Product line results for the Quarter:

  • Broadcast Graphics (BG) accounted for $30.8 million during the quarter (85% of total revenue versus 86.7% last quarter), an increase of 6% versus the same period ago, and an increase of 1% versus the previous quarter. The BG order backlog was $35.6 million, comparable to the size observed at the same time last year, and down 3.6% versus the previous quarter.

 

  • Media Asset Management (MAM) revenue in the quarter was $5.66 million (18% of total revenue versus 16% last quarter), up 5% versus the same period a year ago, and up 35% versus last quarter.   The MAM order backlog was $14.6 million, up 37% versus last year, and up 5% versus last quarter

 

Geographic Performance for the Quarter:

  • Revenue from EMEA was $17.1 million (47.2% of total revenue versus 47.5% last quarter), up 25% versus the same period last year and up 2% versus last quarter

 

  • Americas revenue was $8.9 million (24.8% of total revenue versus 27.6% last quarter), down 14% versus last year, and down 13% versus last quarter.

 

  • APAC revenue was $10.1 million (27.9% of total revenue versus 23.2% last quarter), up 9% versus last year, and up 3% versus last quarter

 

Results for full year 2014:

The full year results were headlined by growth of 31% in EBITDA and 80% in cash flow from operations.

Vizrt’s 2014 revenue was $141.5 million, an increase of 16% versus the $122.4 million recorded during 2013.

Net profit for the 2014 was $15.5 million ($0.23 per share), which is considerably higher than the $3.6 million ($0.06 per share) net profit from 2013.  The attributed its improved profitability to a change in product mix, consistent financial prudence, and the acquisition of Mosart MediaLabs

Gross margins for 2014 were 70%, which was a slight improvement from the 68% margins from 2013.    EBITDA was $27.7m (20% operating margin) for the full year 2014, a significant year-over-year increase from the $15.5 million (13% operating margin) recorded during 2013.

Operating expenses for 2014 were $71.1 million, a 14% increase over the operating expense level of 2013.

  • R&D expenses for the full year were $22.5 million (31.6% of revenue), an increase of 18% versus 2013

 

  • Sales and marketing expenses for 2014 were $35.2 million (49.6% of revenue), up 9% against the sales and marketing expense from 2013

 

  • General and administrative expenses were $13.3 million (18.8% of revenue), up 23% versus the 2013 calendar year

 

The geographic breakdown of 2014 sales consisted of 26% from Americas, 48% from EMEA, and 26% from APAC.

Vizrt ended 2014 with 584 employees compared to 542 at the end of Q4 2013. 24 employees were added following the Mosart acquisition in Q1 2014.

 

 

Update on Pending Acquisition by Nordic Capital

Company management provided an update on its previously announced acquisition by Nordic Capital.  Final closing of the transaction remains subject to certain conditions including the decision of Israeli tax authorities regarding a tax withholding ruling. Vizrt believes the process will come to a positive conclusion in the next several weeks.  The acquisition was first announced on November 10, 2014 and approved by a majority of shareholders on December 18, 2014.

 

 

 

Business Outlook:

Martin Burkhalter, Vizrt’s CEO, stated: “Our strong performance continued in Q4, despite the fact that we did not see the discretional spending towards the year-end that we normally have witnessed in previous years. Our strong performance is also reflected in our solid backlog going forward. I am particular pleased with the improvement of MAM results and the MAM backlog which increased by 37% compared to the same time last year.”

.

.

Related Content:

Press Release: Vizrt Reports Q4 and 2014 Results

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

NeuLion Completes Acquisition of DivX

Broadcast Vendor M&A | Posted by Joe Zaller
Feb 02 2015

Online video platform NeuLion has completed the acquisition of DivX, a provider of video codecs and software for viewing and authoring.

The total transaction value was approximately $62.5m, comprised of 35.89 million newly issued shares of its common stock and a two-year convertible promissory note in the initial principal amount of $25 million subject to working capital credit of $2 million.

DivX CEO Kanaan Jemili will become CEO of the combined company, and NeuLion CEO Nancy Li will become Executive Vice Chairman of company’s board of directors

This is the fourth time in recent memory that DivX, a former publicly traded company has been acquired.

In 2010 DivX was acquired by Sonic Solutions $323m.  At that time Sonic Solutions said it planned to form a new professional technology division, which combined DivX subsidiary MainConcept with Sonic’s existing professional products group in order to offer a ‘one-stop-shop’ for companies that are looking to incorporate media management technologies into their products and services.

Less than a year later, Sonic Solutions was itself acquired by acquired by Rovi for $720m.

In 2014 Rovi sold DivX and MainConcept to Parallax Capital and StepStone Group for $52.5m in cash, plus a maximum earnout of $22.5m

 

.

.

Related Content:

Press Release: NeuLion Completes Acquisition of DivX

Broadcast Vendor M&A: Rovi Sells DivX and MainConcept to Parallax Capital and StepStone Group for $75 Million

Rovi – Parallax Capital: DivX Purchase Agreement

Press Release: Rovi Announces Sale of DivX and MainConcept Businesses

Press Release: Parallax Capital Partners and StepStone Group to Acquire DivX

Rovi to buy Sonic for $720 million

Sonic Solutions to buy DivX in $323M bid to become digital media leader

Sonic Solutions Integrates Newly Acquired MainConcept, Forms New Pro Technology Division

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

Broadcast Vendor M&A: Telestream Acquired by Genstar Capital

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Jan 07 2015

Telestream_Logo (new in 2014)

Transcoding and workflow vendor Telestream announced that it has entered into a definitive agreement to be acquired by Genstar Capital, a San Francisco-based private equity firm that manages funds with total capital commitments of over $3 billion and targets investments focused on selected sectors within the financial services, software, industrial technology, and healthcare industries.

The seller was Thoma Bravo, the private equity firm that purchased Telestream in 2011 for an undisclosed amount.

Terms were not disclosed, but Telestream said that “the transaction recognizes the company’s significant growth and positions it well for the next phase of expansion.”

The deal comes just four months after Telestream issued a statement saying that its transcoding and workflow revenue increased by 40 percent in 2013 versus 2012, and had achieved profitable growth for the last 14 years. At that time, company CEO Dan Castles attributed the company’s impressive track-record of growth to both innovation and management stability.

Telestream will continue to operate as an independent entity, and its existing management team will continue with the company in their current roles.

Thoma Bravo said in a statement that since it bought the company, Telestream saw “incredible growth on several fronts,” thanks to new product launches, strategic M&A, and expanding its executive and sales team to drive further growth. “Thoma Bravo worked in partnership with management over our three year ownership period to invest in the business, make acquisitions and accelerate the company’s growth,” said Holden Spaht, a managing partner at Thoma Bravo. “The company today is a clear leader in the digital video space with the deepest set of products and services in the market.”

Castles issued an upbeat statement about the deal, and telegraphed he believes that under Genstar, Telestream might continue to use strategic M&A and become an industry consolidator.

“Genstar’s mid-market focus and deep expertise in the software industry will enable Telestream to further accelerate our growth,” said Castles. “Over the past several years, Telestream has experienced its most significant growth. We look forward to our new partnership with Genstar as we increase our investment in existing products, accelerate our reach into new customer verticals and fuel our next phase of development through additional M&A activity. Our product portfolio and business models are well suited for the Genstar environment.”

“Genstar has been following Telestream closely and this acquisition is consistent with our strategy of investing in vertical market software companies,” said Eli Weiss, a Managing Director of Genstar. Telestream is a leader in its market and has posted profitable growth since its founding. As even more content is generated and viewed on more devices, we believe the company will continue its demonstrated growth trajectory, and we will support Telestream’s experienced and successful management team to expand organic growth via new product releases and pursue add-on acquisitions.”

The deal is expected to close in mid-January 2015.

 

Genstar’s acquisition of Telestream is the latest in a series of deals related to online video and transcoding.

As broadcasters and media companies scramble to deploy multi-screen services, transcoding is seen by many as a key technology.  As a result, transcoding has also attracted its fair share of financing and M&A activity.  Here’s a quick run-down of some of the recent transcoding deals and related-financial news:

 

 

 

  • In April 2014, Imagine Communications acquired Digital Rapids for an undisclosed amount

 

  • In April 2014, Dalet acquired Amberfin for an undisclosed amount

 

  • In January 2013, Amazon unveiled its “Amazon Elastic Transcoder.” Based on the company’s Amazon Web Services (AWS) cloud computing platform, the Elastic Transcoder the service provides “a highly scalable, easy to use and a cost-effective way for developers and businesses to transcode video files from their source format into versions that will playback on devices like smartphones, tablets and PCs.”

 

  • In August 2012 Brightcove bought Zencoder, a 2-year old start-up with $2m in revenue for $30m, and subsequently launched a cloud based transcoding service at IBC 2012

 

 

 

 

 

 

 

 

 

 

  • RGB Networks bought transcoding vendor Ripcode in 2010

.

.

 

Related Content:

Telestream Says Transcoding and Workflow Revenue Increased by 40 Percent Last Year

Broadcast Vendor M&A: Telestream Buys Captioning Provider CPC

More Broadcast Vendor M&A: Private Equity Firm Acquires Telestream

More Broadcast Vendor M&A — Telestream Purchase of Anystream Now Official

Elemental Technologies Says Revenue Increased by 50 Percent in 2013

Elemental Technologies Says Revenue Doubled in 2012 to $21 Million as Transcoding Technology Continues to Grow

Elemental Closes $13 Million Funding Round, Latest in Series of Transcoding Deals

Harmonic Moves Transcoding Technology to the Cloud, Launches AWS-Based Service

Amazon Launches Scalable Cloud-Based “Elastic Transcoder” Service – A Potential Disruptor in a “Hot” Technology Space

More Broadcast Vendor M&A: Brightcove Buys Zencoder for $30 Million in Latest Video Transcoding Deal

More Broadcast vendor M&A: Wohler Buys RadiantGrid, Latest in Series of Transcoding Deals

Envivio Files for $85 Million Goldman Sachs Led IPO

Envivio Closes $16.5 Million Fundraising Round

More Broadcast Vendor M&A: Cisco to Buy Inlet Technologies for $95m

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

Broadcast Vendor M&A: EVS Acquires All Shares of SVS GmbH and Dyvi Live SA

Broadcast technology vendor financials, Broadcast Vendor M&A, Broadcaster Financial Results | Posted by Joe Zaller
Jan 07 2015

EVS_Logo (2013)

EVS announced that it now owns 100% of Scalable Video System GmbH (SVS) and Dyvi Live SA, two related firms that produce and market IP-based production switchers.

EVS, which purchased 25% of SVS in May 2013, has now paid €1m in cash to acquire the remaining 75% it did not already own. The deal also includes an “a possible future earn out based on the performance over the 2015-2020 period.” However, the terms of the earn-out provision were not specified.

Separately, EVS also paid €100,000 to acquire the remaining 5% it did not own in Brussels-based Dyvi Live SA, which distributes SVS products under the DYVI name

In its Q3 2014 financial results, EVS said the principal reason it had invested in SVS was to give the company access to SVS’s “promising technology.” The company went on to describe it’s financial relationship with SVS and DIVT, saying: “Notwithstanding that EVS only holds 25.1% of the shares outstanding as at September 30, 2014, the Group considers to have the control of SVS because it has the power on the business decisions and it controls totally the outflow of the company through the exclusive distribution agreement between a new fully owned subsidiary (DYVI LIVE, fully consolidated in the EVS accounts) and SVS. Moreover, EVS finances the future expenses occurring for the SVS development. Consequently, SVS is fully consolidated and non-controlling interests are accounted for (74.9%). In 9M14, these two entities have contributed EUR 0.1 million to EVS revenues, EUR -2.7 million to EBIT and EUR -1.7 million to net group profit, including non-controlling interest. At September 30, 2014, goodwill amounted to EUR 1.1 million.”

In announcing it has acquired the remainder of the outstanding shares in both SVS and DIVY, EVS said “these moves will enable EVS to manage that promising product line in a more efficient and holistic way.”

 .

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

 

 

Broadcast Vendor M&A: Vitec Group Buys SmallHD for up to $30 Million in Cash

Broadcast technology vendor financials, Broadcast Vendor M&A, Broadcaster Financial Results | Posted by Joe Zaller
Dec 11 2014

The Vitec Group, which owns more than a dozen brands in the broadcast industry, announced that it has acquired the business of SmallHD for up to $30m.

Based in North Carolina, SmallHD provides high-definition on-camera field monitors used by broadcasters and independent content creators, so its products are complementary with Vitec wide range of camera support and accessory brands, including Vinten, Vinten Radamec, Sachler, OConnor, Andon/Bauer, Autoscript, Camera Corps, Teradek, The Camera Store, Haigh-Farr, Litepanels, and Petrol Bags.

Typical of a Vitec M&A transaction, the deal includes an up-front cash payment and a large potential earn-out for SmallHD managers if the company meets certain performance targets after being acquired.

Specifically, Vitec will pay an initial cash consideration of $4.6m on a debt/cash free basis, and up to a further $25.4m, payable in cash, dependent on SmallHD’s performance over a two and a half year period to 30 June 2017.  To achieve the maximum payment, SmallHD must deliver an annualized EBITDA run-rate of $9m in 2017.

For the financial year-ended 31 December 2013, SmallHD had sales of $8.1m, and generated an unaudited adjusted profit before tax of $300,000. At the end of 2013 SmallHD had gross assets of $2.5 million.

Vitec says that SmallHD has grown during 2014 and is investing in new product platforms, and that the company anticipates “both healthy sales and profit growth going forward.”

According to Vitec, the SmallHD deal is in line with its “strategy of offering a growing range of high technology solutions to the Group’s established global customer base. It complements Vitec’s existing video activities, including Teradek, which serves a similar customer base. There are opportunities to sell SmallHD’s products through Vitec’s global sales and distributor network. SmallHD is being acquired from its current management, who will remain with the business, and it will operate as a business unit within the Videocom Division.”

The consideration will be financed out of Vitec’s existing banking facilities. The Board expects the acquisition to be earnings enhancing in the year ending 31 December 2015.

“I am delighted to welcome the SmallHD team to Vitec, said Vitec CEO Stephen Bird. “This high technology business complements our market-leading broadcast activities and is in line with our strategy of enabling our customers to capture and share exceptional images. There is an increasing demand for SmallHD’s products from the growing community of independent content creators who use this world leading technology. The business has great prospects and we anticipate that it will generate a good return on our investment.”

The purchase of SmallHD is similar to the 2013 transaction when Vitec acquired Teradek for up to $30m.  For the Teradek deal, Vitec paid $14.9m in cash and up to a further $15.5m dependent on Teradek achieving against annual EBIT targets over the three-year period to 31 December 2015.

The Teradek deal appears to have been a success for Vitec.  Since the time of the Teradek acquisition, subsequent Vitec financial filings indicate that the company has indeed been making earn-out payments to Teradek shareholders over the past year.  The addition of Teradek, which is active in the fast growing bonded cellular and wireless communication links segment, forced the company to re-think it’s overall portfolio, and ultimately to divest its IMT Wireless Communications and Microwave Business in mid-2014.

 

.

.

Related Content:

Vitec Group Announces Intention to Divest IMT Wireless Communications and Microwave Business

Vitec Group 1H 2014 Results: Videocom Down 1%, Bexel up 39.9%

Broadcast Vendor M&A: Vitec Buys Teradek for $15 Million

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

%d bloggers like this: