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Talk about the revolution...

by Sean Williams on Oct 19, 2010

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All the signs at IBC pointed to a reinvigorated broadcast technology market after a period of transition that has brought consolidation, prised open new markets and has shunned fads in favour of obtainable revenues. Digital Broadcast reports from IBC 2010…

The build-up to this year’s IBC focused heavily on 3D video - almost every stand at the exhibition nodded to it. However there was a more general theme running through the show: change.

The broadcast technology industry has undergone a number of changes in recent years, some spurred by the recession, others driven by changing technology. The result has been an increase in potential customer base with companies exploringcs new verticals. Firms are tightening product integration, improving open standards and reassessing product lines to offer broadcasters more value.

One of the more notable changes was the volume of merger and acquisition activity either concluded or announced at the show. What was the major motivation for these deals, and how will they affect broadcasters?

In July this year Canadian manufacturer Ross Video announced that it was to acquire router manufacturer Codan Broadcast. In August it also revealed that it was to add to the Codan purchase by acquiring Norpak Corporation.

“It actually wasn’t planned to be on an acquisition trail, they were just opportunities that came along,” says Nigel Spratling, marketing product manager, Ross Video. “In the case of Codan, Ross had a partner relationship with them several years ago. The owner of the company is a larger organisation and they didn’t really understand it very well, and they actually put it on the market some time ago. They approached Ross about a purchase and seeing as the partnership with them had done well, a deal made a lot of sense.”

So did the wider economic climate have any influence on the deals?

“Probably, simply because the parent company wasn’t doing particularly well. I can understand why there are acquisitions. We all know that in a recession there are companies that might have nice technology that would be good to acquire.”

The Norpak deal followed a similar pattern. Norpak makes the Nielsen encoders used in the US for producing audience data, a mandatory piece of equipment for all American broadcasters.

“The corporate owner of Norpak – even though it was a nice profitable little business – they approached us, and said, ‘we don’t really understand this, its profitable, it’s not really hurting our operation, but we’ll see if we can find someone else who might be interested’. So it’s really a coincidental opportunity rather than us setting out to acquire companies,” explains Spratling. “The company would rather grow organically, because sometimes acquisitions can be very difficult. Even though it is a good idea, absorbing people, technology and different systems can be very difficult.”

Perhaps the most significant recent deal in the industry is the acquisition of Omneon by Harmonic which was concluded at the show. The agreement has been well-publicised in recent months with both parties talking openly about the US $273m transaction. But what must be done to ensure the combination of two such large organisations occurs smoothly, and how will broadcasters be affected?

“As with any merger there are integration challenges,” says Geoff Stedman, SVP, marketing and business development, Omneon. “You have to get people in the right position and articulate goals, responsibilities and functions. I wouldn’t describe it as a challenge, it’s simply work that has to be done to make it function.


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