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Ericsson to expand managed services with acquisition of Technicolor’s Broadcast Services

With facility consolidation continuing and new equipment spending marginal at best, the opportunity to help broadcasters and production facilities grow their business through outsourcing is clear. With this in mind, Ericsson, a provider of image processing and networking technology, announced its has offered to acquire the Broadcast Services Division of Technicolor, headquartered in France, for roughly $25 million in cash. The closing of the acquisition is subject to regulatory rules, but is expected to be complete later this year.

Ericsson currently manages the channel playout and other master control services in Nordic countries like Sweden (such as TV4 Group) and said it will use this experience to improve efficiency, introduce innovation and increase revenues for the broadcasters worldwide. The company’s Global services division offers consulting, systems integration and managed services.

Technicolor’s Broadcast Services division is well known in the broadcast industry. In 2008, Technicolor Broadcast Services division reached a long-term agreement to provide NBC Universal with international broadcast distribution and media management services. As part of the deal, Technicolor acquired NBC Universal’s broadcast distribution center in Denver, Colorado. Today, Technicolor manages the preparation and international distribution of dozens of NBC Universal channels, of which most are managed from the Denver facility and the balance managed from existing Technicolor facilities in London, Paris and Singapore.

Thomson Multimedia bought the Broadcast Services Division of Technicolor in 2000. In March of 2011 the company changed its name to Technicolor and sold off its Thomson Video Networks business (encoders, multiplexers, video servers and other head-end equipment) to the Fonds de Consolidation et de Développement des Entreprises (FCDE). A consortium of major banks and insurance companies based in France funds the FCDE.

Frederic Rose, CEO of Technicolor, said that the sale to Ericsson is “consistent with Technicolor’s strategy to focus on media monetization solutions, new growth businesses, and strengthen its balance sheet.”

With the Technicolor Broadcast Services acquisition, Ericsson gains approximately 900 employees and established centralized playout operations in France, UK and the Netherlands that support a number of leading broadcasters. It also allows Ericsson to substantially increase its current broadcast operations in terms of channels managed and households reached.

Ericsson said it is the number one independent playout service provider in the Nordic countries, and has managed services agreements with broadcasters in Europe and Asia. Once this acquisition is complete, Ericsson will be the leading independent playout service provider in Europe.