Posts Tagged ‘digital media M&A’

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

Broadcast Vendor M&A, SEC Filings | Posted by Joe Zaller
Apr 01 2014

Rovi has sold its DivX and MainConcept businesses to Parallax Capital Partners and StepStone Group in a cash and stock deal valued at up to $75m

Under the terms of the deal, Rovi will receive an initial payment of $52.5m, and may receive up to three earnout payments over the next three years that could add another $22.5m to the transaction price. Any earnout payments will be based on the achievement of upon certain milestones agreed by the parties in the transaction.

Rovi had previously its intention to sell the DivX and MainConcept before the end of the second quarter of 2014 as part of a strategic effort to focus on growth opportunities related to its core entertainment discovery technologies and services.

“The sale of DivX was the last of a number of significant steps we’ve taken over the past year to realign the organization for sustainable, long-term growth and I’m pleased we met our commitment to complete this transaction, and did so ahead of schedule,” said Thomas Carson, President and CEO, Rovi Corporation.

The sale price represents a significant drop in value for DivX, which was acquired by Sonic Solutions in June 2010 for $323m.  Less than six months later, Rovi acquired Sonic Solutions for $720m.  At that time, Rovi said the combination of Rovi and Sonic “will be able to power the next generation of digital entertainment offerings with content discovery, delivery, and enhanced interactivity capabilities that support advertising and drive consumer engagement.”

The transaction is expected to close by April 1, 2014.

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Related Content:

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

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Big Media M&A: Disney to Acquire Lucasfilm for $4 Billion

broadcast technology market research | Posted by Joe Zaller
Oct 30 2012

The Walt Disney Company said that it has agreed to acquire Lucasfilm Ltd. for $4.05 Billion in a stock and cash transaction from George Lucas, who owns 100% of the business.

Under the terms of the deal, Disney will pay Lucas approximately half of the purchase price in cash, and the remainder via approximately 40 million shares of Disney stock.

At the close of the transaction Disney will acquire ownership of Lucasfilm, including its popular Star Wars franchise, as well as Lucasfilm’s operating businesses in live action film production, consumer products, animation, visual effects, and audio post production.

Disney will also acquire the substantial portfolio of cutting-edge entertainment technologies that are owned by various Lucasfilm companies including Lucasfilm Ltd., LucasArts, Industrial Light & Magic, and Skywalker Sound. Disney says its present intention is for Lucasfilm employees to remain in their current locations.

Disney likened the Lucasfilm deal to its earlier acquisitions of Pixar and Marvel, which it said has enabled it to “create maximum value” through the use of innovative technology and multiplatform distribution on a truly global basis.

The two companies have a long-standing relationship between them that includes successful integration of Star Wars content into Disney theme parks in Anaheim, Orlando, Paris and Tokyo.  Following on from this deal, it’s likely the relationship will be expanded greatly.  Disney said that Star WarsEpisode 7 is targeted for release in 2015, with more feature films expected to continue the Star Wars saga and grow the franchise well into the future.

“This transaction combines a world-class portfolio of content including Star Wars, one of the greatest family entertainment franchises of all time, with Disney’s unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value,” said Robert Iger, Chairman & CEO of The Walt Disney Company

The Boards of Directors of Disney and Lucasfilm have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, certain non-United States merger control regulations, and other customary closing conditions. The agreement has been approved by the sole shareholder of Lucasfilm.

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Related Content:

Press Release: Disney to Acquire Lucasfilm Ltd.

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© Devoncroft Partners. All Rights Reserved.

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NAB 2011 And The Investment Banker’s View of the Broadcast Technology Industry

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A, market research | Posted by Joe Zaller
Mar 29 2011

The 2011 NAB show is less than two weeks away and there appears to be a feeling of optimism in the industry, something that has been lacking for the past year or two.  The economy is seemingly healthier, the financial performance of both broadcasters and technology vendors has improved, and digital media is a hot topic across many industries as companies roll out plans to bring video and audio content to a growing number of platforms and devices. 

The pre-NAB period is typically when expectations are set for the year, as both customers and vendors reveal their respective buying and selling plans. So far there have been year there have been some interesting articles written about what customers are shopping for at the show, what new technologies are on display and of course the most important trends in the broadcast industry in 2011.  

But there’s another group of industry observers who also have an interesting view on the outlook for the broadcast industry – investment bankers and private equity firms – and this year there appears to be more interest than usual from these players.

So what do investment bankers think about the broadcast industry, and what are their objectives for the NAB show?  In a word: deals. 

At this year’s NAB show, bankers and PE players should have plenty to keep them busy.

Video and audio technologies have become strategic to many companies outside of the traditional broadcast business, so bankers will use the NAB show as a way to find companies that might add value to a larger enterprise or a portfolio of companies.

Within the traditional broadcast industry, the improving economy has increased speculation about broadcast vendor M&A and consolidation.

Indeed, as shown below, our most recent research of senior executives at broadcast technology vendors reveals that while about a third of companies intend to retain their private status, many others expect to be involved in some sort of strategic transaction within the next 2-3 years. 

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Recently Covington Associates and Silverwood Partners, two investment banks that focus on the broadcast and digital media industries, published pre-NAB “teaser” documents for their clients and prospects.

Covington’s pre-NAB market analysis provides a concise overview of macro drivers in the industry and highlights recent digital media M&A activity.  This is (as far as I know) the first time that Covington has published a pre-NAB industry analysis, presumably driven their recently enlarged digital media team, which marries former industry executives and investment banking expertise.

Silverwood has been consistency active in the broadcast industry for the past decade, and typically publishes a report before and after major industry trade shows. You can read their pre-NAB 2010 document here, their pre-IBC2010 document here, and their IBC 2010 Post-Show Perspectives here. 

Silverwood’s 39-page pre-NAB 2011 document takes an in-depth approach.  It covers trends in the digital media industry, recent financial performance by vendors, macro industry drivers, the accelerated pace of change in the broadcast technology space, the “3D hype cycle,” and the way customers are changing their commercial focus and broadcast technology procurement plans as their revenue models shift towards “new media.”

Silverwood ends their deck with an interesting section on broadcast industry IPO, PE and M&A transactions, and why company valuations may differ, based on a number of factors. In doing they are seeking to balance creating excitement about M&A, and setting realistic expectations about valuations.

Overall both are worth reading, regardless of whether you are a vendor, broadcaster, or independent industry observer.  They provide a perspective that is sometimes missing when people discuss the broadcast business. 

At the end of the day the broadcast industry is a business; so when you head off to the NAB show, make sure you understand what both technology and financial people are thinking.

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Related Content:

Covington Associates: 2011 NAB Show Overview

Silverwood Partners: 2011 NAB Show Strategic Industry Analysis

Broadcasting & Cable Article: Gearing up for NAB 2011

Broadcast Industry’s Most Comprehensive Market Study Reveals Top Trends of 2011

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