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Cable Technology Feature Article

March 13, 2012

Ericsson Targets European Playout Services Market with Binding Offer for Technicolor

By Laura Stotler, TMCnet Contributing Editor

In a move that will increase Ericsson's (News - Alert) broadcast operations with more channels managed and more households reached, the communications giant has put in a binding offer to acquire the Broadcast Services Division of Technicolor (News - Alert). The French company is a technology leader in the media and entertainment market.

The Ericsson acquisition is subject to regulatory administrative approvals and consultations. It would add 900 skilled professionals and playout operations throughout France, the UK and the Netherlands to Ericsson's portfolio, serving several leading broadcasters. This would enable Ericsson to increase its current broadcast operations and boost its managed services strategy in the broadcasting space.

Playout covers the transmission of radio or TV channels from the broadcaster to the broadcast networks that ultimately deliver content to the audience in broadcasting. Playout networks may feature transmitters for analog or digital radio and TV, satellites and cable networks.

“As the TV industry is undergoing fundamental changes with the transition to multi-platform, on-demand television, teaming up with a trusted partner enables broadcasters to meet the increasing commercial and technological complexity and competition in the TV market,” said Magnus Mandersson, executive vice president and head of business unit global services, Ericsson. “We combine our service and technology leadership with strategic investments in playout operations, broadcast capability and competence.”

Ericsson has been working to apply a managed services business model to its established telecom operations in order to drive efficiencies, add innovation and increase revenues for broadcasters. The company has been investing in processes and tools in the broadcasting segment and is already the number one independent playout service provider for Nordic countries. It has managed services agreements with broadcaster in Europe and Asia as well, and the acquisition would elevate Ericsson to become the leading independent playout service provider in Europe.

The acquisition is expected to close around the middle of this year. The purchase price is set at close to $25 million with a potential earn-out of up to $11.7 million based on 2015 revenues of the Broadcast Services activity.

“This transaction is consistent with Technicolor's strategy to focus on media monetization solutions, new growth businesses, and strengthen its balance sheet,” said Frederic Rose, CEO of Technicolor. “For Ericsson, managed services are a core business and after completion of this divesture, the broadcast services activity will benefit from the company's know-how and global scale necessary to remain a key player in the worldwide broadcast industry.”

Edited by Jennifer Russell

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