Market Watch

Technicolor to Sell Thomson Video Networks

March 28, 2011

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Technicolor has received a binding offer from the Fonds de Consolidation et de Développement des Entreprises (FCDE) for the purchase of its Thomson Video Networks business. The FCDE is funded by a consortium of major banks and insurance companies based in France.

In early 2010, Technicolor reorganised its Grass Valley business unit into three distinct divisions (broadcast, transmission and head-end) and announced its intention to divest itself of these groups. Thomson Video Networks is the head-end division of Grass Valley producing multiplexers, video servers and other head-end equipment

This sale is the last of the three Grass Valley divisions to be agreed. As reported by IHS Screen Digest in January 2011, both the transmission and broadcast divisions have either agreed or completed sales with US private equity firms.

The distribution industry, including multiplexers, video servers and head-end equipment, was worth over $3.5bn in 2008, according to the IABM's market study authored and researched by IHS Screen Digest. It is within this market that the FCDE will be looking to elicit a profit from Thomson Video Networks.

Grass Valley, of which Thomson Video Networks was previously a part of (under the Technicolor umbrella), publicly reported a loss of €87m in 2009 and suffered a 31 per cent drop in revenues between 2008 and 2009. The head-end business represented 20 per cent of operating losses in the same period.

Following the worst of the downturn, the FCDE will potentially benefit from renewed growth in the distribution sub-segment. The focus will need to be on ensuring that this industry-wide growth is reflected in Thomson Video Networks. Costing-cutting will also be important given the previous losses made by the business unit.

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