Analyst Blogs by D.I.S.

Parent company Technicolor has been trying for over a year to find the right buyer for its Grass Valley broadcast and professional business.  Now, a pending sale to Bay Area-based Francisco Partners has been announced at a price reputed to be in the range of $100 million USD.

"We're very happy that we've reached this milestone," said Grass Valley Senior Vice President Jeff Rosica. "There are still some regulatory hurdles to go through, but we're confident the sale will go through."  Company executives hope to have the deal completed by the end of the year.

With nearly $5 billion of capital under management, Francisco Partners is one of the largest technology-focused private equity firms in the world, investing a reported $4 billion in capital in more than 50 technology companies since it was founded in 1999.

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It was only just a few years ago that everything in the market was energized about the prospects for delivery to mobile platforms. And, that meant that every booth at IBC, NAB and other major shows, had signs up saying things like "we speak mobile" to take advantage of the heat of the subject, even if that manufacturer really didn't have anything to offer.

Today is no different when it comes to 3D. Despite the fact that so few end-users have actually tried doing production 3D or even have a purpose for it yet, the passions have been inflamed and the rush is on to be 3D-ready. Seems like a stampede. Again, signs abound everywhere and seminars, boot camps, trade fairs, Web-inars, magazine features, web sites, special exhibit areas -- 'ghettos' -- at big trade shows, and blasts are all touting the need for being 3D-ready. Yes, even D. I. S. is guilty of  cashing in, as we have deployed a new survey called 3D Production World tm 2010 and it is in the field now and due to be published before IBC.  

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Its virtually 30 years since C. Robert Paulson, who past away March 24, 2010 at the age of 87, wrote the principal chapters of the 1981 publication, BM/E's ENG/EFP/EPP Handbook: Guide to Electronic News-gathering of which I was editor and publisher, being then, Broadcast Management / Engineering's and World Broadcast News' Associate Publisher and Director of Special Projects.

The book was the seminal publication regarding the then emerging arena of electronic news gathering. The additional editor -- for the audio sections -- was the late writer Robert Rivlin. The introduction was by CBS TV's Dr. Joseph C. Flaherty, long considered the 'father of HDTV' but also a creator of the modern newsroom technology and promoter of that phenomenon. The broadcasting industry had just begun experimenting with the idea of tape-based field gathering and eliminating 16MM cameras that were the standard, along with the ubiquitous Nagra portable audio recorder, for shooting the news. In the mid-70s, RCA and Ikegami pioneered the 'Handi-Walkie' shoulder mountable camcorders and although they were hefty, they made film obsolete for news. They were quickly followed by many other brands

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Truth be told, no definitive numbers exist, but there are rumored to be as many as 300 smaller and group owned TV stations in one stage or another of bankruptcy in the U. S. and more than a few broadcast or cable networks close to that point. This brings into question several issues. The first, the balance of power in a democracy and the ability of locally-owned stations to have their political voices be heard. And, secondly, the affect on their buying power -- or lack thereof -- and how that may impact equipment manufacturers, service providers and banks.

The Congress established and the F. C. C. mandated, that there be a delicate balance between groups, networks and individual stations (many 'family owned'), and restrictions on cross-ownership of radio, print and TV in local markets, in order to assure that there be a democratic distribution and fairness in the source of news that citizens got. If enough of the local and group stations fail or change hands the system could break down.

As far back as a decade ago, when I was the monthly financial and industry trends columnist for Television Broadcast magazine, one of many of my past part-time hats, and became aware of the, then, enormous stress that so many stations were under faced with having to heavily leverage themselves in order to transition to Digital. The cost of Digital transmitters, towers and antennas as well as associated equipment was forcing them to abandon plans to purchase other gear and putting them in a defensive position. Although there are clear signs of a strong recovery, that rebounding could be dampened if more stations file and certainly if they completely fail or close down.

Our data shows that the decline in advertising revenue that caused the failures has abated and is already rebounding. But, the biggest beneficiaries to date have been the networks while local stations have yet to see much help.

This trend, if we can call it that, will likely slow this year, but in the meantime, a delicate balance of long standing has become fragile and we should care.

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Seemingly a marriage made in heaven, the video-encoding vendor Harmonic announced an agreement to acquire privately held Omneon, a provider of video-production and play-out gear, including servers and storage solutions, in a deal worth about $274 million in cash and Harmonic stock.

What does this mean for them and for our industry? In part, it indicates that there are more than few companies with enough cash to buy out others, even very successful others. It also means that some well managed and often purchased equipment making companies can be very attractive to bigger and richer ones trawling for acquisitions.

Omneon has approximately 280 employees worldwide, and is based in Sunnyvale, Calif., with research and development facilities in Sunnyvale and Beaverton, Ore. Harmonic, also based in Sunnyvale, had 842 employees as of the end of 2009 and plans to San Jose this summer. Harmonic said there may be some redundancies between the two companies that will result in layoffs but that any staff reductions would be very minimal.

A company couldn't have been more attractive than Omneon, as our server and storage reports have confirmed. It has been on a run of success hardly dimmed by the recent recession. And, Harmonic has been also riding a wave of success, fueled by sustaining a leading position in encoding technology, as that D.I.S. report also affirms.

Together, under the Harmonic umbrella, the two companies represent the building of what will eventually be an even bigger and more attractive -- to end users -- aggregated group.

It makes us think of mergers and acquisitions past as well as perhaps those to come. Stay tuned.

-Doug

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