EDIA RIDGE M CAPITALB ADVISORS
DIGITAL MEDIA INVESTMENT BANKING GLOBAL REACH, VERTICAL DEPTH 2014
Industry Overview September 2014 To Our Colleagues and Friends Attending IBC2014 Another IBC is upon us, and once again, like you, we are keeping a close eye on the key innovations and trends in our quickly evolving industry. MediaBridge co-founders and managing partners Ethan Jacks and John Bowen, together with two senior industry advisors, Tom Ohanian and Graham Sharp, will be on hand throughout the show. We look forward to sharing our perspective on the M&A and corporate finance activities in the industry and our recent transactions.
Ethan E. Jacks John C. Bowen Managing Partner Managing Partner [email protected] [email protected] 617.592.2739 (m) 617.921.0075 (m)
2 MediaBridge has been busy since IBC2013 …
… advising four top-tier media technology companies in both M&A and capital- raising transactions: Pebble Beach Systems Ltd, with its advanced automation and channel-in-a-box products, was acquired by Vislink plc for $24.7 million. Canada-based X2O Media, known for its HTML-5-based platform for advanced visual communications, was acquired by Barco, a global manufacturer of visual systems, for C$21 million. Teradek LLC, an Irvine, California-based leader in wireless video technology, was acquired by UK-based The Vitec Group plc for up to $30.4 million. iZotope Inc., a leader in music and audio software based in Cambridge, Mass., received $12 million in growth capital from investor ABS Capital Partners, a top private equity firm based in Baltimore, Md.
We look forward to meeting with you either at the show or soon thereafter to discuss your strategic growth plans and options.
3 MediaBridge Co-Founder and Managing Partner
Our principals have advised on more than 30 mergers and acquisitions in the media sector worldwide. Leading the team are Ethan Jacks and John Bowen, who have more than 50 years of experience in media technology with unmatched expertise in the film, video, audio, broadcast, Internet, and new media markets.
• 30+ years experience as investment banker, corporate executive, and corporate lawyer • Co-founded MediaBridge in 2012, after having led Covington Associates expansion into the digital media and technology sectors • Served as Avid Technology senior executive (EVP Corp Development, CLO, CFO) from 1999 to 2006. Led the company during its most significant period of growth. Managed 12 strategic acquisitions, doubling the company’s revenue to Ethan Jacks $1 billion and growing market cap from $400 million to $2.5 billion • Co-founded an environmental technology company in early 90s, which achieved a public market cap of $1 billion in 1996 • BS from MIT and MBA from MIT Sloan School of Management; JD, Georgetown University Law Center
4 MediaBridge Co-Founder and Managing Partner
• Extensive investment banking, equity research, and operational IT experience • Prior to co-founding MediaBridge, led Covington Associates expansion into the digital media and technology sectors, representing both privately held and publicly traded companies • VP Equity Research at First Albany Corporation covering digital media technology, networking hardware and software, and enterprise software companies. Previously employed at Sybase, McDonnell Douglas, and Digital Equipment Corp.
John Bowen • Author of three significant industry research reports on media technology and CDN markets • 15 years of experience in traditional and new media technology, and 15 years of IT industry experience • BS in Mechanical Engineering with Digital Systems concentration from University of New Hampshire; MBA from Babson College
5 MediaBridge Senior Advisors Attending IBC
• 30+ years of experience in the media industry • Current member of the digital media strategy team as Cisco Systems • Former corporate fellow and member of founding team at Avid Technology • Former chief strategy officer at Signiant Tom Ohanian • Academy Award and two-time Emmy Award recipient for scientific and technical invention
• 25+ years of executive management experience in the media industry, now at The Vitec Group • Current board member of Media Asset Capital, a full-service media consultancy, and AV3, a Web distribution channel Graham Sharp • Former president and CEO of xtranormal Inc. • Former EVP and GM of Avid’s video division, a $470 million business with 1,500 employees • Executive management positions with Post Impressions, Discreet Logic, and Dynatech
6 Senior Advisors
• President of CRX Partners, a media technology business development consultancy • CRX and MediaBridge work to provide the best combination of strategic and transaction expertise to the professional and consumer audio/video markets • 30+ years of executive experience in professional, broadcast, and commercial audio • Senior VP Business & Professional Group Americas (Allen & Heath, Calrec, D&M Pro), D&M Holdings • Full-time consultant, D&M Holdings (M&A and post acquisition integration focus) • VP/GM, Professional Audio, Sony Broadcast & Professional Courtney Spencer
• 15+ years experience building new businesses in digital media, with a focus on content creation, production, and distribution • VP of media and entertainment at Box.com • Former chief strategy officer of Final Draft Inc., the world leader in script-writing software • Former executive at Secure Path Technology, an enterprise cloud-based metadata company • Co-founder and former CEO of Sample Digital Inc., where he oversaw development of Emmy Josh Kline Award-winning Digital Dailies solution
• CEO of OpenDrives, where he is responsible for day-to-day operations and leads product development and technology strategy • 20-year veteran of the media and technology industry with executive positions held at EMC's Media & Entertainment practice in the Cloud Infrastructure Group, Echostar, and SecurePath Technology. Also built the digital media divisions of two high profile postproduction companies. • Began as an investment banker providing M&A advisory services to companies in the technology, gaming, and publishing industries Chad Knowles • Author of published works for the Motion Picture Association
7 Senior Advisors
• 20+ years experience in business development, strategic planning, M&A, IPO, private equity, and international operations • Former partner at North Bridge Ventures, covering communications, wireless, and software • Former senior executive at Shiva Corporation, contributing to a successful IPO, several acquisitions, and a rapid growth phase • Adjunct lecturer at Babson College and former senior lecturer at MIT Sloan Angelo Santinelli • Graduate of Fordham University with an MBA from Harvard Business School
• Strategic advisor specializing in the evolution of the global IT market • CEO of UK-based IT security leader Corero Network Security • Co-founded or lead several technology companies as chairman or CEO, including Reva Systems (acquired by ODIN) and Xedia Corporation (acquired by Lucent) • Awarded “CEO of the Year” by Massachusetts Telecommunications Council • Served on the boards of directors of many venture-backed startups and industry consortia Ashley Stephenson • Graduate of Imperial College, London, and an Associate of the Royal College of Science
• 20+ years in the entertainment industry including award-winning work as an editor, producer, and director • Director of digital media and technology at the University of Southern California’s School of Cinematic Arts • Worked on numerous feature films including the Academy Award-winning Harlan County, U.S.A. (1976), Arthur (1981), and Visions of Light (1992) Meri Weingarten
8 Senior Advisors
• 25+ years experience in technology, media, education, and healthcare • Chief marketing officer at Health Dialog and QuantiaMD • 10 years advising universities and diverse healthcare industry players • 15 years at Forrester Research in both research and marketing executive roles • Graduated from Harvard University with a degree in economics Mary Modahl
• EVP and CFO of BCS Solutions Inc., a leading Southern California-based vendor of supply chain automation solutions incorporating RFID and other wireless-based network architectures • Served as the COO and CFO of several major venture capital and private equity- backed companies in technology, retail, and manufacturing • From 2002 to 2007, served as CFO of M-Audio, a pioneer and leader in MIDI-based Scot Ross music and audio products, where he led the sale of M-Audio to Avid Technology for $231 million • Graduate of USC
9 Representative Transactions
Transaction closed during employment with: * Covington Associates; ** Silverwood Partners; *** Avid Technology
10 Representative Transactions
Transaction Closed During Employment with: * Covington Associates; ** Silverwood Partners; *** Avid Technology
11 Vislink Acquires Pebble Beach Systems for $25 Million
• MediaBridge Capital Advisors served as exclusive investment banking advisor to Pebble Beach Systems Ltd in connection with its acquisition in March 2014 by Vislink plc. • Based in Weybridge, Surrey, UK, and founded in 2000, Pebble Beach Systems is a leading developer and supplier of automation, channel-in-a-box, and content management solutions for TV broadcasters, cable, and satellite operators. • Vislink plc is a global technology business leader specializing in high-performance wireless communications products and services for the broadcast, defense, and security markets.
“MediaBridge has been advising us for several years to secure the best strategic partner for our next stage of growth. With its fantastic global tier-1 client base in the broadcast sector, Vislink offers us an ideal platform for accelerated growth and expansion of our software solutions. MediaBridge was integral to this successful outcome.”
>> Peter Hajittofi, Co-Founder and Managing Dir., Pebble Beach Systems
12 Barco Acquires X2O Media for C$21 Million
• MediaBridge Capital Advisors served as exclusive investment banking advisor to X2O Media in connection with its acquisition in March 2014 by Barco NV. • Based in Montreal, Canada, X2O was established in 2006 as a spin-off from VertigoXmedia, a Montreal-based company with strong expertise in the field of broadcast graphics automation. X2O’s innovative platform enables the connection, management, and delivery of real-time data through dynamic and interactive channels, from any source to any screen, anywhere. • Barco, a global technology company, designs and develops visualization products for a variety of selected professional markets. Barco is active in more than 90 countries with 4,000 employees worldwide and sales of €1.158 billion in 2013.
“X2O Media perfectly complements our offering and skills portfolio, and is an important step in our strategy to expand our portfolio beyond video and imaging. Customers’ expectations regarding workflow and content management shift to end-to-end and easy-to-use visualization systems and cloud-based solutions. X2O Media’s platform will play a crucial role in allowing Barco to tap into these new opportunities while differentiating itself further from competition.”
>> Eric Van Zele, CEO, Barco
“The MediaBridge team was with us every step of the way in our acquisition process with Barco,” said David Wilkins, founder and CEO of X2O Media. “MediaBridge’s expertise in all aspects of the transaction, particularly the transaction structure and closing execution, was superb. We are delighted to be joining the Barco family, and we are deeply appreciative of the effort from the MediaBridge team in completing the deal on excellent terms.”
>> David Wilkins, CEO, X2O Media
13 Vitec Group Acquires Teradek for $30 Million
• MediaBridge Capital Advisors served as exclusive investment banking advisor to Teradek LLC in connection with its acquisition in August 2013 by The Vitec Group plc. • Teradek is a world leader in wireless video devices and platforms used by broadcasters, filmmakers, businesses, and Web channels to wirelessly transmit high-quality images. Its products are used in live electronic news gathering, real-time monitoring and recording, aerial visual capture, and webcasting. • The Vitec Group plc is a leading international provider of products and services for the broadcast, photographic, and military-aerospace-government markets. The acquisition will not only strengthen Vitec's product offerings – particularly to the growing number of independent videographers and business users – but will complement Vitec's existing video activities, including its range of broadcast microwave systems, and allow Teradek's products to be sold through Vitec's global sales and distributor network.
“This represents a major step forward for Teradek, which I believe will expand our reach, fuel our continued growth, and enhance our focus on product innovation. We will undoubtedly benefit from the resources and reach of Vitec Videocom and will embrace the opportunity to work alongside some of its other market-leading brands.”
>> Nicol Verheem, CEO and Co-Founder, Teradek
14 iZotope Receives $12 Million Investment from ABS Capital
• MediaBridge Capital Advisors served as exclusive investment banking advisor to iZotope Inc. in connection with a $12 million investment from ABS Capital Partners, which closed in August 2013. • Leading audio technology company iZotope will use the funds to develop new products, expand its markets, and increase sales and marketing efforts. With over $2 billion raised since inception, ABS Capital Partners has invested in over 100 growth companies over the past two decades. • iZotope creates professional audio products for the music, entertainment, and education industries. Its product portfolio is comprised of solutions for audio creation, repair, mixing and mastering. iZotope’s clients include musical giants such as Depeche Mode, Garbage, Skrillex, and Wu-Tang Clan; and radio stations and TV programming such as CBS' “Survivor,” the Discovery Channel’s “Deadliest Catch,” the World Cup broadcast, and the Grammy Awards. iZotope technology is also directly integrated into products made by industry leaders such as Adobe, Avid, and Sony; video games from companies like Microsoft, Harmonix, and Ubisoft; and a growing number of mobile phone applications.
“iZotope is a company driven by a wealth of creative brainpower. Coupled with our position as a market leader, this funding will enable us to realize more of our creative vision, accelerating innovation and new products for our loyal customer base.”
>> Mark Ethier, CEO and Co-Founder, iZotope
15 Public Market Overview Publicly Traded Media Technology Companies Market Capitalization - Large Cap
($USD in millions) Adobe Akamai Arris Autodesk Cisco Ericsson Harman Naspers Panasonic Sony
August 2006 18,725 6,324 1,267 7,818 135,950 52,414 5,415 5,017 46,686 43,638
August 2008 22,719 3,873 1,161 7,957 142,067 36,235 1,992 9,141 42,882 38,457
August 2010 15,153 8,653 1,062 6,553 115,708 32,918 2,281 15,655 26,417 28,211
August 2012 15,377 6,651 1,544 7,039 102,209 30,063 3,092 22,483 15,706 11,291
August 2014 35,761 10,765 4,431 12,160 128,016 40,641 7,837 50,801 28,312 20,251
Adobe Akamai Arris Autodesk Cisco Ericsson Harman Naspers Panasonic Sony
Cash: 3,330 757 552 1,906 52,074 10,222 584 1,298 6,277 15,268
Total Debt: 1,506 595 1,575 747 20,909 3,442 559 3,680 6,334 10,497
Enterprise Value (EV): 33,937 10,603 5,454 11,001 96,851 34,303 7,813 53,342 28,598 20,748
EV/ LTM Revenue 8.3x 6.0x 1.1x 4.6x 2.1x 1.1x 1.5x 9.1x 0.4x 0.3x
EV/ LTM EBITDA 45.4x 17.1x 9.6x 30.3x 7.9x 7.6x 14.2x 40.5x 4.6x 4.2x Share Price as a % of 96.3% 95.7% 85.4% 91.4% 95.8% 95.0% 97.0% 92.5% 90.7% 93.3% 52 Week High
Source Capital IQ. 1) Stock Prices as of 9/1/2014. 2) Cash includes short-term investments
17 Publicly Traded Media Technology Companies Market Capitalization - Mid Cap
($USD in millions) Belden Coship Dolby EVS Evertz GoPro Rovi Technicolor TiVo Yamaha
August 2006 1,579 344 2,317 738 841 1,191 4,391 688 4,274
August 2008 1,584 335 4,569 1,159 1,363 1,581 1,230 863 3,484
August 2010 1,105 603 6,410 701 1,100 4,554 395 931 2,017
August 2012 1,529 481 3,474 652 962 1,661 832 1,131 1,944
August 2014 3,160 1,040 4,757 583 1,196 6,527 2,191 2,599 1,626 2,758
Belden Coship Dolby EVS Evertz Go Pro Rovi TiVo Technicolor Yamaha
Cash: 445 42 772 48 93 105 442 783 350 606
Total Debt: 1,562 221 0 39 2 108 1,158 173 1,183 119
Enterprise Value (EV): 4,276 1,221 4,007 575 1,107 6,608 2,907 1,016 3,395 2,315
EV/ LTM Revenue 2.0x 4.3x 4.2x 3.3x 3.7x 6.4x 5.2x 2.3x 0.8x 0.6x
EV/ LTM EBITDA 13.5x NM 12.2x 8.7x 13.8x 78.0x 14.9x 11.6x 4.9x 6.2x Share Price as a % of 92.1% 59.3% 98.5% 63.6% 92.5% 99.4% 91.3% 98.6% 95.5% 87.1% 52 Week High
Source Capital IQ. 1) Stock Prices as of 9/1/2014. 2) Cash includes short-term investments
18 Publicly Traded Media Technology Companies Market Capitalization - Small Cap
($USD in millions) Avid Barco Brightcove ChyronHego Dalet Demand DTS Envivio Harmonic JVC
August 2006 1,691 1,070 42 314 478
August 2008 861 550 92 579 834
August 2010 438 556 21 623 596 240
August 2012 358 723 353 20 22 813 424 141 535 489
August 2014 329 874 196 101 30 165 409 50 602 372
Avid Barco Brightcove ChyronHego Dalet Demand DTS Envivio Harmonic JVC
Cash: 71 127 21 5 8 132 70 42 134 476
Total Debt: 0 77 1 3 8 74 30 0 0 765
Enterprise Value (EV): ND 834 176 99 23 108 369 5 468 720
EV/ LTM Revenue NA 0.6x 1.5x 1.8x 0.5x 0.3x 2.7x 0.1x 1.0x 0.2x
EV/ LTM EBITDA NA 8.8x NM 19.7x 7.8x 5.9x 12.0x NM 18.1x 4.4x Share Price as a % of 94.6% 88.3% 37.4% 88.5% 86.7% 26.5% 96.0% 42.1% 79.6% 86.2% 52 Week High
Source Capital IQ. 1) Stock Prices as of 9/1/2014. 2) Cash includes short-term investments
19 Publicly Traded Media Technology Companies Market Capitalization - Small Cap (cont’d)
($USD in millions) Kudelski Orad RealD Quantum SeaChange Synacor Vislink Vitec Group VIZRT
August 2006 1,478 430 245 215 376 237
August 2008 654 32 367 264 64 317 215
August 2010 1,334 22 805 316 264 38 293 227
August 2012 533 6 542 385 268 215 56 454 210
August 2014 792 20 465 317 249 56 100 443 316
Kudelski Orad RealD Quantum SeaChange Synacor Vislink Vitec Group VIZRT
Cash: 123 5 28 104 103 26 13 15 37
Total Debt: 417 20 35 204 0 3 14 131 0
Enterprise Value (EV): 1,078 35 472 417 139 33 94 556 279
EV/ LTM Revenue 1.1x 0.8x 2.4x 0.8x 1.0x 0.3x 0.9x 1.1x 2.1x
EV/ LTM EBITDA 8.5x 7.1x 8.6x 57.7x NM NM 11.1x 5.8x 10.3x Share Price as a % of 80.8% 93.6% 70.6% 78.6% 49.8% 70.1% 96.9% 83.6% 96.3% 52 Week High
Source Capital IQ. 1) Stock Prices as of 9/1/2014. 2) Cash includes short-term investments
20 Publicly Traded Media Distribution Companies Market Capitalization
($USD in millions) Charter Comcast EchoStar Netflix Pandora Sirius Time Warner Verizon
August 2006 73,602 1,363 5,761 68,156 103,108
August 2008 61,773 2,818 1,877 4,225 58,646 100,012
August 2010 3,900 49,584 1,656 7,064 3,839 34,581 85,537
August 2012 7,841 89,356 2,356 3,317 1,995 9,698 39,428 122,331
August 2014 17,043 141,570 4,604 28,702 5,583 20,589 65,848 206,515
Charter Comcast EchoStar Netflix Pandora Sirius Time Warner Verizon
Cash: 9 3,854 1,689 1,714 324 170 4,480 6,424
Total Debt: 14,039 46,549 2,390 900 0 4,624 22,563 110,044
Enterprise Value (EV): 31,073 185,681 5,401 27,888 5,259 25,043 83,931 311,246
EV/ LTM Revenue 3.6x 2.8x 1.6x 5.7x 6.6x 6.3x 2.7x 2.5x
EV/ LTM EBITDA 10.3x 8.3x 7.2x 67.0x NM 19.0x 10.3x 5.9x Share Price as a % of 93.8% 96.9% 93.9% 98.4% 66.9% 86.8% 87.4% 92.8% 52 Week High
Source Capital IQ. 1) Stock Prices as of 9/1/2014. 2) Cash includes short-term investments
21 Publicly Traded Media Content Companies Market Capitalization
($USD in millions) CBS Discovery Lions Gate News Corp Perform Scripps Viacom Walt Disney
August 2006 22,530 980 26,228 62,474
August 2008 11,002 1,181 6,790 18,312 60,702
August 2010 9,925 13,268 982 6,953 19,574 64,091
August 2012 23,266 16,761 2,134 1,419 8,805 25,754 88,763
August 2014 31,247 24,416 4,443 10,227 1,127 11,169 34,323 154,283
CBS Discovery Lions Gate News Corp Perform Scripps Viacom Walt Disney
Cash: 261 515 50 3,145 136 202 1,585 4,090
Total Debt: 6,247 7,074 1,255 0 70 1,385 12,778 16,136
Enterprise Value (EV): 37,506 31,576 5,648 7,258 1,066 12,730 45,765 169,421
EV/ LTM Revenue 2.5x 5.3x 2.3x 0.8x 2.7x 4.9x 3.4x 3.5x
EV/ LTM EBITDA 10.3x 12.7x 17.8x 10.3x 21.5x 10.5x 10.4x 11.7x Share Price as a % of 87.1% 96.3% 85.7% 95.1% 43.7% 92.0% 90.4% 98.6% 52 Week High
Source Capital IQ. 1) Stock Prices as of 9/1/2014. 2) Cash includes short-term investments
22 Video Markets Overview Broadcast and Video Trends to Watch
1. Consolidation – The broadcast sector is in the midst of a significant period of realignment and consolidation, as recently demonstrated by acquisitions from companies like Belden, Harris and Vitec. Macro-economic effects, in particular the continuing low cost of capital, facilitate the financing of transactions. Micro-economic effects, including product rationalization and operating efficiency, addressable market expansion, improved core strategic capability, and the human capital within innovative executive teams, are further driving strategic M&A. Seller rationales include strong valuations, gaining access to a larger organization’s resources and channels, and attaining global marketing reach.
2. Innovation – Innovation in today’s media landscape, as evidenced by companies like Teradek, Pebble Beach, and GoPro, is driven by transformative, lower-cost, high-performance technologies; adoption of IT-based/software architectures; and the growth of multiplatform and new-media distribution alternatives. Innovation creates a beneficial balancing force against consolidation, as it adds to the number of participants in the marketplace and creates more choices for customers. Innovative vendors are producing solutions that reduce cost of ownership by orders of magnitude. However, deep innovation is often costly. Fortunately record amounts of venture and private equity capital are available from top international investors.
3. Expansion of IT-based Solutions – There is a marked trend toward the acquisition of IT-based software expertise by traditional hardware companies like Barco and Vislink in a move to standardize IT and cloud-based technologies. With IT-based architectures, not only can technology and service-provider companies evolve and adapt more quickly to changing business requirements, but they benefit from higher-margin businesses and the potential for recurring revenue models. Companies that sell traditional hardware-based solutions are eager to move into software-defined products that are less expensive for customers and easier to bring to market and maintain.
4. Programming in the “New” Golden Age of Television – Compelling Content and Constant Connectivity – Bold and successful programming like Netflix’ ground-breaking “House of Cards,” and runaway hits like AMC’s “Breaking Bad” and “Mad Men,” requires an exceptional blend of artistic creativity, higher budgets for superior production values, and both traditional and online distribution infrastructures that provide the consumer with unfettered control of their programming of choice. Media enterprises that can consistently deliver this combination of resources will realize extraordinary market value.
24 Video M&A Select Transactions from 2014
Value EV/ LTM Date Target Name Acquirer Name Select Transactions ($MM) Revenue Aug-14 Ooyala $270 - Telstra Corporation Jul-14 Cache-A Corporation - - ProMAX Systems Jul-14 LiveRail - - Facebook Jun-14 AdColony $350 6.6x Opera Software Jun-14 Shotgun Software $54.5 - Autodesk Jun-14 Dropcam $555 - Nest Labs Jun-14 Afterlive.tv - - Twitter Jun-14 mDialog - - Google/DoubleClick May-14 AMX $365 - Harman Pro Group May-14 BrandAds - - Extreme Reach Apr-14 itaas - - Cognizant Technology Apr-14 SeaWell Networks - - ARRIS Group Apr-14 Digital Rapids - - Imagine Communications Apr-14 Unreel - - Ross Video Mar-14 Pebble Beach Systems $25 2.6x Vislink Mar-14 LiveTV $500 4.0x Thales Avionics Mar-14 Sample Digital $12 3.0x Prime Focus Technologies Mar-14 Automated Data Systems - - Ross Video Mar-14 Conax $250 2.4x Kudelski Mar-14 Snell - - Quantel Limited Mar-14 X2O Media $19 4.2x Barco NV Mar-14 PlayBox Technology - - Masstech Group Feb-14 Grass Valley USA $220 0.8x Miranda Technologies Feb-14 Wegener Corporation & Westport Res. - - Novra Technologies Feb-14 Plantri - - ANNOVA Systems Feb-14 Digitalsmiths Corporation $135 - TiVo Feb-14 Doremi Labs $113 - Dolby Laboratories Feb-14 Azuki Systems - - Ericsson Feb-14 Capablue - - Arqiva Broadcast Jan-14 Outcast Media - - Gilbarco Jan-14 Unicorn Media $51 - Brightcove Jan-14 Pilat Media Global $72 1.6x SintecMedia
Source Capital IQ, Press Releases, Public Filings, *Includes Cash
25 Video M&A Select Transactions from 2013
Value EV/ LTM Date Target Name Acquirer Name Select Transactions ($MM) Revenue Dec-13 VideoIQ $32 2.9x Avigilon Corporation Dec-13 EdgeCast Networks $390 - Verizon Digital Media Services Dec-13 Aspera - - IBM Dec-13 Imagine Communications - - Harris Broadcast Communications Dec-13 Rhythm NewMedia $57 4.9x Blinkx Nov-13 Mosart Medialab $17 3.2x VIZRT Nov-13 MediaSite $8 1.0x Sonic Foundry Oct-13 Symmetricom $304 1.1x Microsemi Oct-13 Megahertz Broadcast Systems - - OKNO-TV Oct-13 Aurora Networks $323 1.5x Pace Sep-13 Wegener - - Novra Technologies Sep-13 Broadcast Text International - - The Carlyle Group Sep-13 Saffron Digital $224 1.1x Symmetricom Aug-13 Teradek $30 - Vitec Group Aug-13 Adap.tv $405 - AOL Aug-13 Amplifier Technology $6 0.8x Vislink Aug-13 CPC Computer Programing and Captioning - - Telestream Aug-13 Montalto - - Ross Video Aug-13 MOG Technologies - - Infostrada Aug-13 Grab Media - - Blinkx Aug-13 Prime Focus Limited, Backend Business $38 - Prime Focus World Creative Services Aug-13 Stringwire - NBC News Digital Jul-13 Boxee $30 - Samsung Electronics Jul-13 Red Bee Media - - Ericsson May-13 Hego $29 1.9x Chyron Corporation Mar-13 Skyfire Labs $155 35.9x Opera Software Mar-13 Harmonic, Optical Equipment Business $46 0.9x Aurora Networks Mar-13 Acme Packet $2,004 6.0x Oracle Feb-13 Harris Broadcast Communications $225 Gores Broadcast Solutions Feb-13 MIPS Technologies $100 5.4x Imagination Technologies Group Feb-13 Olympus Corporation (11.5% stake) $535 - Sony Feb-13 MIPS Technologies, Certain Patents $350 5.4x Allied Security - Source Capital IQ, Press Releases, Public Filings
26 Video M&A Select Transactions from 2012
Value EV/ LTM Date Target Name Acquirer Name Select Transactions ($MM) Revenue Dec-12 Argo Systems - - Sintec Media Dec-12 KickApps Corporation - - PerfectSense Digital Dec-12 Vervue $32 - Akamai Technologies Sep-12 FastSoft $14 - Akamai Technologies Aug-12 Zencoder $30 21.4x Brightcove Jul-12 NDS Group $5,022 5.1x Cisco Jul-12 Miranda Technologies $356 1.9x Belden Jul-12 Avid, Consumer Video Editing Assets $3 - Corel Corporation Jul-12 QuickPlay Media - - Madison Dearborn Partners Jul-12 Technicolor, Broadcast Services Division $37 - Ericsson Jun-12 Thrane & Thrane $479 2.4x Cobham Jun-12 Hyro, Digital Division $18 - KIT digital May-12 Seachange, Broadcast Server and Storage Business $5 - Vantage Point Capital May-12 Seachange, On Demand Division $27 - Vubiquity Apr-12 RadiantGrid Technologies - - Wohler Mar-12 Gennum Corporation $501 3.6x Semtech Mar-12 Contendo $268 9.0x Akamai Technologies Feb-12 Roxio - - Corel Corporation Feb-12 IP Video Systems $20 - Barco Jan-12 Trident Microsystems, Set Top Box Business $65 - Entropic Communication Jan-12 Telestream - - Thoma Bravo Jan-12 Sezmi Corporation $52 - KIT digital
Source Capital IQ, Press Releases, Public Filings
27 PE/VC Activity in Video Markets Select Transactions from 2014
Select Investors
$20-65m
$10-20m
$5-10m
$0-5m
Source Capital IQ, Press Releases, Public Filings
28 PE/VC Activity in Video Markets Select Transactions from 2013
Select Investors
$20-65m
$10-20m
$5-10m
$0-5m
Source Capital IQ, Press Releases, Public Filings
29 PE/VC Activity in Video Markets Select Transactions from 2012
Select Investors
$20-65m
$10-20m
$5-10m
$0-5m
Source Capital IQ, Press Releases, Public Filings
30 Audio Markets Overview Music and Audio Trends to Watch
1. Continuing Consolidation – Electra Partners added DiGiCo and Calrec to its portfolio, which already included Allen & Heath, acquired in 2013. With some of the strongest brands in live sound and broadcast mixing, the expanded group will have new leverage in a number of ways. In the past year, Gibson acquired Cakewalk and WOOX Audio from Philips. Also in the past year, audio-centric Harman International acquired control system manufacturer AMX, and Riverside Partners acquired a 60% stake in DPA Microphones. In the broader world of audio, the blockbuster deal was Apple’s acquisition of Beats for $3 billion.
2. Desktop Production Systems – The emergence of electronic dance music as a powerful force has brought greater focus to sampling and synthesis, as exemplified by our client iZotope. Meanwhile, leadership positions in the DAW market are evolving, with increasing differentiation between larger/established facilities (mostly Avid-based, especially in the U.S.) and a rapidly growing self-contained producer/engineer/composer market that can choose from an expanding range of DAW products. These include Apple’s Logic Pro X, a $199 powerhouse that includes a huge instrument library, as well as several competitors with similarly powerful systems.
3. Consumer Audio – Following a period of relative indifference to sound quality in an age dominated by mobile music consumption, the CEA and major CE brands are promoting “high-resolution audio” to consumers as a way of educating listeners to the availability of high-quality recorded music and high-fidelity home playback systems. Meanwhile, the U.S. premium headphone ($100+) market segment passed $1 billion in 2013 according to NPD, increasing by 21% over 2012. The CEA forecasts this segment will grow in 2014 to $1.5 billion. Overall 2013 U.S. headphone sales were $2.3 billion, up 11% over 2012, according to NPD. The CEA forecasts revenues of $430 million for Bluetooth speakers in 2014, or 12% growth over 2013. Automotive electronics (including car audio) is still the “800-pound gorilla,” with 2014 expected revenues reaching $11 billion for factory systems, increasing 20% over 2013, according to the CEA.
4. Music Industry – Total album (digital and CD) unit sales have slipped by about 3.5% in the first half of 2014 compared to the first half of 2013, according to Nielsen SoundScan’s mid-year 2014 data. According to Electronic Musician Magazine, the takeaway is “consumers are listening to more music, they just don’t want to pay for it.” A bright spot is the health of subscription and ad-supported streaming, with growth of 89% in equivalent albums over the same period, according to Nielsen SoundScan. This is a primary emerging trend for the future of music distribution.
32 Audio M&A Select Transactions 2014 and 2013
Value EV/ LTM Date Target Name Acquirer Name Select Transactions ($MM) Revenue Jun-14 Abacast - - WideOrbit Jun-14 Pioneer Home Electronics - - ONKYO Corporation Jun-14 WorxAudio Technologies - - PreSonus Audio Electronics Jun-14 Comfort Audio - - Sonova May-14 Beats Electronics $3,000 5.0x Apple Apr-14 WOOX Innovations $135 - Gibson Brands Mar-14 Calrec Audio $23 - Electra Partners Mar-14 Revolabs - - Yamaha Corporation Mar-14 Sabine $10 - ClearOne Mar-14 Topspin Media - - Beats Music Feb-14 Formosa Prosonic Industries $17 - Wistron Corporation Feb-14 Lastar - - Legrand Feb-14 ZUUS Media $30 - Ubiquity Broadcasting This image cannot currently be displayed. Dec-13 Soundsphere - - MSE Audio Group Dec-13 line 6 - - Yamaha Corporation Oct-13 Duran Audio $25 - Harman International Oct-13 Bang & Olufsen of Chelsea - - Kensington Audio Visual Sep-13 Livio Radio $10 - Ford Global Technologies Sep-13 Cakewalk - - Gibson Brands Aug-13 Westwood One $252 1.1x Cumulus Media Aug-13 Music Intelligence Solutions - - R&R World (Tunehog) Jul-13 Blue Microphones - - The Riverside Company Jun-13 Allen & Heath $66 - Electra Private Equity May-13 Teraki $16 - Sunrise (China) Technology Group May-13 Red Box Recorders - - ISIS Private Equity Apr-13 Bob Carver - - Emotiva Audio Corporation Feb-13 Martin Professional $146 - Harman International
Source Capital IQ, Press Releases, Public Filings
33 Audio M&A Select Transactions 2012
Value EV/ LTM Date Target Name Acquirer Name Select Transactions ($MM) Revenue Oct-12 McIntosh Laboratory - - Fine Sounds
Oct-12 Beats Electronics (25.1% stake) $151 - HTC Europe
Jul-12 MOG $14 - Beats Electronics
Jul-12 IMM Sound $27 - Dolby Laboratories
Jul-12 Phorus $13 - DTS
Jul-12 M-Audio and AIR Software Group $14 - Numark Industries
Jun-12 Trident Microsystems, MAP-Xtm Audio Line $1 - CSR
Jun-12 Turbosound - - MUSIC Group Macao
Jun-12 Industrial Accoustics - - AEA Investors
May-12 Redmatica - - Apple
May-12 Intrinctiv - - Soundcloud
Apr-12 SRS Laboratories $148 3.4x DTS
Mar-12 A-Line Accoustics - - Atlas Sound
Mar-12 Imagine Research - - iZotope
Feb-12 SoniVox - - Numark Industries
Source Capital IQ, Press Releases, Public Filings
34 PE/VC Activity in Audio Market Select Transactions from 2014 and 2013
$60m $12m $10m $25m $40m
$0-10m
Source Capital IQ, Press Releases, Public Filings
35 PE/VC Activity in Audio Market Select VC/PE Transactions from 2012 and 2011
Select Investors
$20-200m
$10-20m
$5-10m
$0-5m
Source Capital IQ, Press Releases, Public Filings
36 Media Markets Overview Media M&A Select Transactions 2014
Value EV/ LTM Date Target Name Acquirer Name Select Transactions ($MM) Revenue Sep-14 Perform Group $726 2.8x Access Industries Sep-14 Baseline, LLC. $50 - Gracenote Sep-14 Twitch Interactive $970 - Amazon.com Aug-14 [x+1] $236 3.3x Rocket Fuel Jul-14 SpotXchange $144 - RTL Group Jul-14 ITV $822 3.1x Liberty Global Jul-14 RayV - - Yahoo! Jun-14 Phase 4 Films Group of Companies $25 0.5x Entertainment One May-14 TV18 Broadcast Limited $355 5.6x Independent Media Trust May-14 Network18 Media & Investments $160 2.4x Independent Media Trust May-14 DIRECTV $68,895 2.1x AT&T May-14 Digital Cinema Destinations $66 1.4x Carmike Cinemas May-14 Live Foundry - - Snapchat May-14 Channel 5 Broadcasting $760 - Viacom International May-14 Tvinci Ltd. - - Kaltura Apr-14 Loom - - Dropbox Apr-14 AEG Digital Media - - All Mobile Video Apr-14 Bigframe $15 - AwesomenessTV Apr-14 Cloud Takes - - Technicolor Mar-14 Maker Studios $950 - The Walt Disney Company Mar-14 LIN Media $2,472 3.8x Media General Mar-14 Image Group Limited - - Betley Whitehorne Mar-14 Grupo Corporativo ONO $14,608 6.4x Vodafone Mar-14 Pando Networks $11 - Microsoft Mar-14 FreeWheel Media $360 - Comcast Mar-14 The Culver Studios $85 - Hackman Capital Partners Feb-14 Time Warner Cable $68,708 3.1x Comcast Feb-14 Veveo $82 - Rovi Feb-14 SET Media $30 - Conversant Jan-14 Federated Media Publishing $19 - LIN Digital Media Jan-14 Project Rover $91 - AOL Jan-14 Nielsen Audio, Audience Measurement Services - - comScore
Source Capital IQ, Press Releases, Public Filings
38 Media M&A Select Transactions from 2013
Value EV/ LTM Date Target Name Acquirer Name ($MM) Revenue Select Transactions Dec-13 Local TV $2,725 - Tribune Broadcasting Company Dec-13 Media Convergence Group $35 - The E. W. Scripps Company Dec-13 Advanced Inflight Alliance $225 1.3x Global Entertainment Dec-13 IMG Worldwide $2,300 - Silver Lake, William Morris Dec-13 Gracenote $170 - Tribune Company Oct-13 Chellomedia $1,034 2.1x AMC Networks Oct-13 NTS $162 2.7x Tower Three Partners Oct-13 Convergent Media Systems Corporation $16 Ballantyne Strong Sep-13 Globecomm Systems $267 0.8x Wasserstein & Co Aug-13 Titan Broadcast Management $115 - Sinclair Broadcast Group Aug-13 Baja Broadband $268 3.2x TDS Telecommunications Aug-13 Jumptap $245 3.8x- Millennial Media Aug-13 Orb Networks - - QUALCOMM Aug-13 Digital Generation $829 2.1x Extreme Reach Aug-13 Fisher Communications $355 2.1x Sinclair Broadcast Group Aug-13 FTR $6 0.9x Record Holdings Jul-13 Matcha - - Apple Jul-13 Communications Corporation of America $270 - Nexstar Broadcasting Jul-13 Bresnan Broadband $2,619 5.1x Charter Communications Jul-13 Servicios Audiovisuales Overon (51% stake) $53 1.2x Imagine Media Audiovisual Jul-13 AlloCine $67 Fimalac Jul-13 Parlophone Records $764 1.6x Warner Music Group Jul-13 Post Modern Group $24 - Global Eagle Entertainment Jun-13 Belo $2,185 3.0x Gannett Jun-13 Keynote Systems $341 2.8x- Thoma Bravo May-13 Orb Networks - - Qualcomm May-13 Headland Media $24 2.0x KVH Industries May-13 NBCUniversal Media (remaining 49% stake) $16,700 1.7x Comcast Corporation Apr-13 Maverick Media, Rockford and Eau Claire $16 - Mid-West Family Broadcasting Mar-13 Rhythm & Hues Studio $18 - Prana Studios Mar-13 Ziggo $811 - Liberty Global Mar-13 TV Guide Entertainment (50% stake) $100 - CBS Corporation Mar-13 Charter Communications (26.6% stake) $2,617 3.0x Liberty Media Feb-13 D.EXPRES $21 2.1x Bauer Ausl and 1 Feb-13 Bluefin Labs - - Twitter Jan-13 Switchover Media - - Discovery Communications Source Capital IQ, Press Releases, Public Filings
39 PE/VC Activity in Media Market Select Transactions from 2014
Select Investors
$20-100m
$10-20m
$5-10m
$0-5m
Source Capital IQ, Press Releases, Public Filings
40 PE/VC Activity in Media Market Select Transactions from 2013 and 2012
Select Investors
$20-100m
$10-20m
$5-10m
$0-5m
Source Capital IQ, Press Releases, Public Filings
41 Why MediaBridge?
• Exclusive focus on media technology and decades of experience in media technology and IT markets
• Relevant and recent deal execution experience
• Personal relationships with and knowledge of leading industry acquirers
• Commitment as senior bankers to transaction management leading to optimum results
• Broad financial, legal, and operational skills to best handle complex transactions
• Reputation and integrity
42 Global Reach, Vertical Depth
Ethan E. Jacks John C. Bowen Managing Partner Managing Partner [email protected] [email protected] 617.592.2739 (m) 617.921.0075 (m)
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