Market Insight

Harris Broadcast splits into Imagine Communications and GatesAir

March 20, 2014


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Professional broadcast equipment provider Harris Broadcast will divide into two brand new corporate entities, Imagine Communications and GatesAir. Imagine Communications will provide solutions for delivering and monetizing multiscreen content while GatesAir will focus on TV and radio over-the-air market.

Harris Broadcast was spun out by Harris Corporation and sold off to investment firm Gores Group for $225m at the end of 2012. In December 2013 Harris Broadcast purchased Imagine Communications for an undisclosed fee. Imagine specialised in broadcast-grade software products running on off-the-shelf IT hardware.

Our Take

The professional video equipment industry is going through a state of attempted revival after a number of slow years following the 2008 financial crisis and the quadrennial bubble associated with that year’s Olympics and US elections. In the intervening time, there have been some important changes to the landscape. Video delivery in 2008 was primarily to broadcast devices, set-top boxes and TV sets. Since 2008 this market has shifted towards online delivery to unmanaged devices. While a very small proportion of actual revenue is accruing to these new devices, they have injected a level of uncertainty into broadcaster and operator technical strategies, as well as impose a need for new investment. At the same time, IP video and digital video workflows have allowed commodity IT equipment into the video equipment chain. The combination of these two trends has had a very meaningful impact on the traditional broadcast equipment supplier.

Fundamentally, the available revenue for broadcast equipment is the sum of spend by companies such as broadcasters and pay TV operators on video-oriented products and services. Workflow digitisation has driven spend towards IT hardware, while multiscreen video has driven spend towards services, as well as IT hardware. As a result, traditional broadcast hardware vendors have been looking to consolidate and gain scale economies or to shift focus towards software and services.

Following Sony Professional’s move into professional service, and the consolidation of Miranda and Grass Valley under Belden, Harris Broadcast is the largest remaining broadcast equipment company without a significant recent strategic repositioning. The split into two distinct businesses - Imagine Communications and GatesAir - is intended to provide a forward-looking equipment company (Imagine) focused on software, IP video and multiscreen, as distinct from the traditional (GatesAir) broadcast equipment, in the case of Harris focused around terrestrial transmission equipment. The rationale is that broadcast’s hardware specialisation is becoming commoditised, and will be more dependent upon manufacturing, supply chain and fulfilment. This type of business focus may hamper efforts to create a leaner, more software-oriented strategy – hence the division along those lines.

Both companies have the opportunity to benefit from Harris’ extensive partners and clients list, but it seems reasonable to think that GatesAir’s transmission equipment remit will take it closer to major service vendors, such as Arqiva and TDF, as well as affiliate broadcast groups. By contrast, Imagine Communications is likely to find itself moving closer to broadcasters and pay TV operators.

For similar analysis please see IHS’ upcoming Professional Video Intelligence research portfolio at https://technology.ihs.com/ResearchAreas/467617/professional-video

Geography
USA
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