01 May 2018
| Alan Burkitt-Gray
Private equity company Permira has bought back part of the video service provider business it sold to Cisco for $5 billion in 2012.
The move follows only months after Ericsson also disposed of
a chunk of its video service provider business to a different
private equity investor. Both telecoms vendors have been hurt
by the increasing delivery of streaming video over telecoms
Cisco’s 2012 acquisition of what was then NDS
– which focuses on delivery over cable and satellite
networks – was one of its biggest M&As ever.
NDS’s former chairman and CEO, Abe Peled, will
return as chairman of the re-acquired company.
An Israeli business paper said Permira paid only $1 billion for
the former NDS. Others said this was an over-estimate.
"This is a unique opportunity to lead and shape the video
industry during its transition with the flexibility as a
private company," said Peled. "The new company will have the
scale, technology innovation, and world-class team to deliver
outstanding go-to-market execution, customer engagement, and
new end-user experiences."
Cisco said it will retain the video and media technology
related to its core business in networking, multi-cloud,
security, data, and collaboration. Neither it nor Permira has
given a price for the deal.
Only three months ago One Equity Partners, another private
equity company, bought 51% of Ericsson’s media
solutions business for an undisclosed sum – but left
alone Ericsson’s broadcast transmission services
operation Red Bee Media, which is heavily loss-making.
Paolo Pescatore, CCS Insight’s VP of Multiplay and
Media, commented: "It is a reflection of the challenging
landscape. There are too many solution providers chasing too
few dollars. Bottom line, many of these solutions providers
have diversified and now need to focus on core areas. Despite
this, the media and telecoms industries are closer than
Red Bee started out as BBC Broadcast and, after going through
another set of private equity hands, was bought by Ericsson in
2014-15 to add to its existing portfolio that included
Microsoft Media Room and Tandberg Television. Last year
Ericsson reinstated the Red Bee name but so far has failed to
NDS has been through a similarly complicated history. Started
30 years ago with financial backing from Rupert
Murdoch’s News Corporation – as it was
– NDS focused on encryption and pay-TV technology for
Murdoch’s Sky TV channels. Murdoch’s
group bought it in 1992 for only $15 million. It still supplies
Sky as well as AT&T’s DirecTV and a number of
pay-TV services around the world.
Permira took a stake in 2009 for $3.6 billion and sold the lot
three years later to Cisco, which renamed the business
Videoscape, though tended to use Cisco Service Provider Video
Software Solutions (SPVSS).
Yvette Kanouff, senior vice president Cisco Service Provider
Business, said: "Permira will acquire a market leading
portfolio that spans the video delivery value chain with
solutions including Infinite Video Platform, cloud DVR, video
processing, video security, video middleware, and
She added: "Cisco will retain the video and media technology
related to our core business in networking, multi-cloud,
security, data, and collaboration. I’m very
pleased to say that one of the major reasons for the selection
of Permira is the belief that they are the right investor to
benefit our customers and employees."
Peled said: "Cisco has built a profitable business in the video
space with innovations to capitalise on IP distribution and
cloud-based services. These combined assets provide a
significant new opportunity for the new company. I am thrilled
to be working again in this area with Permira who is committed
to innovation and support for our pay-TV customers, and look
forward to the ongoing working relationship with Cisco in
support of our mutual customers."
Pescatore noted: "There will be more casualties due to further
disruption. This represents an opportunity for other providers
who still focus on connectivity and delivery of video over the