By Peter Bruce
In February this year, the announcement of the acquisition of Snell Advanced Media (SAM) by Belden perhaps did not come as a huge surprise. The merger with the Grass Valley brand is poised and expected to be formally unveiled at 2018 NAB Show. It was clear to many that SAM was up for sale and Belden’s name often came up in the rumour mill; Belden had already made several purchases in recent years, acquiring Miranda in 2012, Softel in 2013 and significantly Grass Valley in 2014. It was apparent that Belden had the cash to go further.
The collection of companies that Belden has acquired may seem a small gathering of non-cable and high IP (intellectual property) value companies for Belden, famous for its wires. But there is much more to these simplified brands.
SAM itself was already a consolidation of Snell and Wilcox, Pro-bel and Quantel. Merging them with Belden’s Grass Valley brand will combine them with the already consolidated brands within Grass Valley.
Grass Valley itself has been through a number of mergers and acquisitions, beginning with Tektronix in 1974. It was then acquired by Thomson in 2002. Of which Thomson had already acquired Philips Broadcast, which had already taken in Bosh/Pye TV making BTS, who had already acquired companies such as Alamar. In 2005, Thomson Grass Valley acquired Canopus. In 2009, Thomson sold Grass Valley to a private equity firm, and it was subsequently acquired by Belden in 2014.
In all, Grass Valley now encompasses around 20 originally separate brands as a result of the continuous consolidation that has happened over its many years of broadcast supply.
The newer sub-industry of the OTT world has also gone through its consolidations, which seems to have peaked (to date) with the acquisition of Elemental Technologies by Amazon in 2015. Broadcast suppliers gasped at the rumoured price of around US$500 million.
In the broadcast RF field, there has been a huge consolidation of the big rivals. In early 2017, Vislink Communication Systems (already merged with GigaWave) was acquired by xG Technology, the parent company of Integrated Microwave Technologies (IMT) — also has already merged Nucomm and RF Central.
At trade shows and conventions today, you look at peoples’ name badges to see what the latest company they have merged with is. Consolidation is happening faster and faster, and it seems it will continue at an even faster and unabated rate.
Are you getting confused and losing track? Well, there is more to come.
The landscape of the broadcast and media industry is changing. However, is it contracting? Well, no. The IABM DC Global Market Valuation and Strategy Report indicates the valuation is growing — although slowly. However, for those who have followed the report, the services section has been growing every year to the point where services currently account for 56.6% of the broadcast and media industry.
Additionally, when you look at the technology, the real move away from hardware to software and services is happening at a great pace. The new entrants into the supply side of the broadcast and media sector are from both the top and the small ends of the scale.
From the top end, we see these newcomers at the major exhibition and conventions coming from huge conglomerates from the IT and telecom sectors — the multi-billion club, rather than being from the multi-million club from inside the industry, which was commonplace in the past.
The new owners at the front of the exhibition halls are the likes of AWS, EMC, Verizon, Telstra and so on, who form a new billion-dollar turnover per year club.
The concern might be that, because of their huge potential in the form of financial resources, our beloved broadcast industry will become just a sub- or side-industry to their main activities.
Over the years, we have seen many bigger boys appear at the big shows with great stands and then disappear only a few years later. This time, it may be different though; the digitisation and move to services has meant that their core business and technology complements what they are already doing now in other technology sectors.
At the lower end, an amazing number of small enterprises are springing up, providing niche IP with software solutions that are able to adapt at an incredible rate. The concern with these guys is that often the business model is for them to be acquired and absorbed into one of the big guys three to four years down the line — effectively becoming an R&D department for the big guys.
So, is it better to absorb an existing company into a bigger one, rather than develop your own solutions?
Well, the reality is that technology is moving so fast that a larger company cannot wait for an unknown outcome from its R&D team to get a solution. Perhaps this is the best way to go; if purchasing a smaller company fast-tracks the solution, then so be it.
For those who understand and track the broadcast and media industry, the feeling may be that several companies could be over-paying for the cost of restructuring the industry — particularly when it comes to the mergers and acquisitions of the medium-sized companies with others that have lived in the same space.
Why are all these mergers and acquisitions happening in the first place?
Firstly, like all companies in the ‘high tech’ sector, we are transitioning from hardware to software/services. Secondly, the consolidation of technologies from parallel industries is happening at a faster and faster rate. Thirdly, the end-user is having to transition to the new technologies to stay alive.
The recent IABM End User Survey shows that technology purchases are focused on the move to over-the-top (OTT) and multi-platform content delivery first on the list, with IP infrastructure third on the list. These technologies are suited to the IT or telecom industry, while the traditional companies are having to consolidate and adapt to address their customers’ rapidly changing requirements.
The reality is that this consolidation with mergers and acquisitions will never stop. The rate of change will never be so slow again.