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.