Harmonic, a US encoder company which also offers cable QAM and some fiber products has acquired Omneon in a $274 million deal in both cash and stock. The merged company will have a large share in online video playout servers and video storage, to go with its strong existing encoder market share, especially in cable. The deal involves $158 million in cash, plus 17.1 million new shares.
Other Omneon products are in video production and management and Harmonic is trying to make this look like it now has an end to end video eco-system from camera ingest to final TV or PC consumption.
‘This proposed combination will position Harmonic to become a global leader in video infrastructure for the digital media industry,’ said Patrick Harshman, President and CEO of Harmonic. ‘Media companies are being driven by ever-increasing demand for video content coupled with consumers’ desire to consume video anytime and anywhere. At the same time, the dramatic growth of video delivery over broadband and wireless networks is blurring traditional boundaries between content producers and service providers.’
This for the world looks like the deal Harmonic should have done in 2006 and 2007 when it acquired both the VoD arm of Entone and Rhozet, paying just $60 million across those two purchases, and neither product line appears to have done well for Harmonic. Both were moves to put it into VoD and OTT video, with Rhozet’s claim to fame being a server what held multiple iterations of video in different resolutions, which were a pre-cursor to modern adaptive streaming. Now it seems to be securing an up and coming player operating in that space, but for a substantial amount more.
Harmonic reckons it can now become a tougher competitor when up against companies like SeaChange International but also and Avid Technology (when did it ever come up against Avid before?).
Harmonic says there is some customer overlap and this has the look of a deal done by its customers, with perhaps one customer saying, ‘Why aren’t you doing anything like this,’ or perhaps, ‘If you were owned by someone bigger I could do a lot of business with you.’
Harmonic is naturally going after deals that are up for grabs in its conventional US cable base, for TV Everywhere style video delivery over the public internet.
Omneon had 2009 revenues of $105 million with 70% of that coming from outside the US. And says that in the playout server market it has a 22% share.
Omneon is privately held, based in Sunnyvale, California and has 100 deployments with customers including ESPN, A&E Networks, NBC, Turner, Dish, Comcast and Discovery.
Harmonic has just come off a quarter where it had sales of $84.8 million, up 25% with net income of $5.3 million versus a loss last time of $18.8 million. Harmonic says it expects next quarter sales to be closer to $180 million to $190 million.