For the Record
by Staff -- Multichannel News, 1/4/2009 7:00:00 PM
Harmonic Scoops Scopus
Sunnyvale, Calif. — Looking to reduce its dependence on sales to cable operators, video-equipment vendor Harmonic plans to acquire Israel’s Scopus Video Networks for about $51 million in cash.
With Scopus, Harmonic will be able to tap into broadcast and programmer segments and grow its international business, analysts said. Harmonic is “becoming less reliant on the cable spend in North America,” Avondale Partners analyst Blair King said.
Harmonic’s cable revenue through the first nine months of 2008, when combined with Scopus’, would drop from 62% to 56% of total revenue. Sales to Comcast — Harmonic’s single biggest customer — would fall from 20% to 16% of revenue, according to King.
For the first nine months of 2008, Scopus had revenue of $55.4 million and net profit of $0.6 million and Harmonic posted sales of $268.1 million and a $50.8 million net profit.
The two companies have largely complementary products, Jefferies & Co. analyst George Notter wrote in a research note. Scopus’ encoders and integrated receiver/decoder (IRD) devices are used by broadcasters and programmers to prepare video for delivery to cable and satellite customers, while Harmonic has focused on supplying video equipment for pay-TV operators.
“Scopus’ primary issue has been scale,” Notter wrote. “We expect that, under Harmonic’s umbrella, the business can perform better.”
Harmonic expects to save money — $8 million to $10 million per year — by finding areas of cost-saving in merging with Scopus, including eliminating redundant job functions.
The deal is expected to close in March 2009. Harmonic’s share price fell 3% the day the acquisition was announced (Dec. 23), closing at $5.59, amid a drop in the broader market.
— Todd Spangler
Voom’s Doom To Cost Cablevision
Bethpage, N.Y. — Cablevision Systems expects to incur between $45 million and $65 million of impairment charges related to the termination of its Voom HD networks business, the company disclosed in a regulatory filing.
The cable company Dec. 18 announced that it would cease the U.S. domestic offering of Voom’s suite of 15 high-definition channels, which include Monsters HD and Kung Fu HD.
The charges are related to “the impairment of certain contractual programming rights, property, plant and equipment and other miscellaneous assets,” Cablevision said in an 8-K filing with the Securities and Exchange Commission. Those include cash expenditures of between $25 million and $27 million related to existing contractual commitments, which are primarily programming related, according to the filing.
Cablevision said the Voom-related charges are expected to be reflected in its fourth quarter 2008 earnings. Except for the cash payments, the company said the impairment charges aren’t expected to result in any material future cash expenditures.
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