Deborah D. McAdams /
12.07.2012 02:02 PM
Harris Broadcast to Be Rebranded in Next Three Years
Business sold this week to private equity group
MELBOURNE, FLA.—The Harris
Broadcast division will retain the Harris name for another three years while it
transitions to a new brand, division chief Harris Morris said this week. Harris
Corp. announced Thursday it was selling the broadcast business to The Gores
Group LLC, a Los Angeles-based equity investment firm, for $225 million.
For the time being, it will be business as usual, Morris said. No immediate cuts are planned for the workforce
of 1,700, and the executive suite will remain intact, he said. Morris will
continue to lead the company from its headquarters in Englewood, Colo. The
facilities in Quincy, Ill., Mason, Ohio and others will be retained, he said.
Harris Broadcast has 15 U.S. locations and 29 in Canada, Mexico and abroad,
where the company started focusing resources following the domestic DTV
Morris said no products or product lines are being targeted for
discontinuation. News, mobile, multichannel playout, multiformat encoding—all
are part of the division’s foundation. The latest Versio release—introduced at
IBC—is on track to ship this month, he said. A major product announcement in
the workflow, infrastructure and networking space, or WIN, is in the works for
the pre-NAB presser.
Harris Corp., a major defense contractor with a $5.5 billion in revenues and
15,000 employees, announced the sale of the broadcast division last May,
because, as Morris noted, “we didn’t quite strategically fit anymore.”
The $225 million sale price raised some eyebrows, particularly following the
$450 million acquisition of Leitch in 2005, and the $340 million Encoda
purchase the year before. As far back as 1999, Harris paid $85 million for
The broadcast business reported an operating loss of $30.8 million on revenues
of $486 million for fiscal 2010, a 17 percent decline in revenues from the
previous year due in part to “significantly lower results in the transmission
systems business,” according to Harris’s 2010 annual report. The period
coincided with the end of the U.S. digital television transition, during which
hundreds of TV stations replaced their transmission facilities.
Broadcast results were combined with other businesses in 2011, and broken out as
a $447.6 million write-down for fiscal 2012. Harris said the write-down
resulted in part from an “unanticipated revenue decline and operating loss” for
fiscal 3Q12 as a result of weaker demand in North America and longer lead times
for international sales.
The Gores deal comprises $160 million in cash at closing, a $15 million subordinated
promissory note and an earn-out of up to $50 million based on future
performance. The transaction is expected to close early next year. The Gores
portfolio ranges from textiles to technology, with brands such as Siemens
Enterprise Communications, Scovill Fasteners, Alliance Entertainment, a CD/DVD
distributor, Equinox payment terminals and others, but no broadcast equipment
manufacturers. Instead, Morris said, Gores brings capital resources as well operational
expertise, e.g., managing a global supply chain, to the table.