--Business Includes Entone's VOD, nPVR and Targeted-Advertising Products
Entone, a privately held San Mateo, Calif.-based company that specializes in IPTV VOD and IP video gateway technologies (note: the company, which also operates an R&D facility in Hong Kong, claims that its IPTV VOD solutions have been deployed by over 35 telcos around the world, including Hong Kong's PCCW, whose now TV service is currently the world's largest IPTV deployment), has entered into a definitive agreement with Harmonic, Inc., that will see the latter acquiring its video networking software business. That business includes technologies for content ingest, distributed content management and video streaming that enable such services as VOD, network PVR, time-shifted TV and targeted advertising insertion. According to Harmonic, by combining its existing video headend, edge and access network solutions with Entone's software, it will be able to provide cable, satellite and IPTV operators with "an advanced and uniquely integrated delivery system for the next generation of both broadcast and personalized IP-delivered video services." Harmonic's announcement is just the latest evidence of an ongoing consolidation in the VOD space. The announcement came on the same day that Cisco announced it will acquire VOD provider, Arroyo Video Solutions (see article in this issue). It also followed Motorola's recent announcement that it will acquire another VOD provider, Broadbus Technologies (see [itvt] Issue 6.87 Part 1).
The deal values Entone at $45 million, comprised of $26 million in cash and 3.54 million shares of Harmonic common stock. It will also see Harmonic assuming liabilities of $1.5 million, and investing $2.5 million, in the form of a convertible note, in Entone's CPE business. That business will be spun out to Entone's existing stockholders immediately prior to the closing of the acquisition. "Our industry is in the midst of an exciting and fundamental transformation to an increasingly on-demand video experience," Harmonic president and CEO, Patrick Harshman, said in a prepared statement. "By bringing together Harmonic's market-leading encoding and stream-processing products and Entone's innovative software suite for managing and streaming personalized video content, we will create a powerful and integrated solution for the emerging on-demand network. In the cable and satellite markets, where Harmonic enjoys strong customer relationships and a large installed base, this comprehensive solution will be a great benefit to our customers as they expand and extend their offerings with new on-demand services. In IPTV, where both Harmonic and Entone have established early leadership positions in our respective solution areas, the combination of our businesses creates a clear industry leader." The acquisition is slated to close in October, and Harmonic says that it will be accretive to its earnings per share from the first quarter of next year. Harmonic plans to showcase a new, integrated solution for on-demand services, that will incorporate Entone's content-creation, ingestion and delivery technologies, at the upcoming IBC show in Amsterdam (September 8th-12th).
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