Ericsson Sells Off Majority Stake in Media Solutions Business; Will Retain Red Bee Media

After a “review of strategic opportunities for its Media business,” Ericsson has sold a majority stake in its Media Solutions Business to private equity firm One Equity Partners, while maintaining full ownership of its media-playout business Red Bee Media. Ericsson announced it will retain 49% of the shares in the Media Solutions Business and it will team with one Equity Partners tolaunch an independent company. Closing of the transaction is expected in Q3 2018 and terms of the transaction were not announced. 

The announcement comes after Ericsson concluded the review of strategic opportunities for Media Solutions and Red Bee Media,  which was initiated in conjunction with the announcement of the company’s focused business strategy on March 28, 2017. In the review, Ericsson has evaluated different opportunities for both units, including partnerships, divestments, and a continued in-house development, based on what generates the best long-term value for Ericsson. As a first step in assessing strategic opportunities, Ericsson has implemented substantial performance improvement programs while continuing to invest in the respective business. Both units have made significant progress during 2017, according to Ericsson.

Börje Ekholm, President and CEO, Ericsson, says: “Media Solutions and Red Bee Media are leading providers of media products and services, and with the performance improvements that are currently being implemented, we see future upsides to both businesses. We are confident that the direction we announce today will enable us to create the best long-term value, for both our customers and our shareholders.”

Media Solutions
One Equity Partners will become the majority owner of Media Solutions. Over the last several years, Ericsson has transformed Media Solutions’ products with a cloud-enabled, standards-based, integrated end-to-end roadmap. The overall mission has been to advance video service delivery with state-of-the-art infrastructure and software. At the same time, all products and operations have been upgraded to match Ericsson’s carrier-grade standards for reliable telecommunications operations and services.

Upon completion of this transaction, Media Solutions will be positioned as a premier independent pure-play video technology vendor, with both hardware and software solutions. Today, all of Media Solutions’ next-generation software products, platforms and services have been reengineered to support rapidly evolving media consumption patterns with microservices-based software and managed services that can be deployed flexibly in both public and private cloud infrastructures. Media Solutions delivers these products and services at scale to:

• 9 of the top 10 global telecommunications companies
• 9 of the top 10 global cable companies
• 9 of the top 10 global satellite operators
• 8 of the top 10 broadcast/media companies

Highlights of Media Solutions’ business include:

• TV platform used every day by over 18 million pay-TV subscribers in 26 countries and regulatory environments
• Enabling the delivery of class leading digital media services to over 1bn homes globally
• Recording 3m video assets daily, with over 200 petabytes of time-shifted video storage deployed
• More than 100,000 events per second tracked by its combined analytics data warehouse
• 6 Technology and Engineering Emmys for our industry-leading technology

Angel Ruiz, who will continue to lead Media Solutions as the CEO, says: “The work we have done to integrate and advance our end-to-end roadmap is paying off in strong customer engagement. One Equity Partners brings valuable experience in the media and telecom sectors, and we’re confident that we have found the right partner to further develop and grow the business.”

Andrew Dunn, Managing Director of One Equity Partners, says: “We are thrilled to partner with Ericsson to grow Media Solutions. We look forward to supporting the customers of Media Solutions with continuing investment in strategic technology innovation.”

Jamie Koven, Senior Managing Director of One Equity Partners, says: “Angel and his team have done a great job with Media Solutions. The technology is industry-leading, the customers are world-class, and we are excited by the prospect of working with this team on the opportunity ahead.”

Media Solutions employees and contractors, as well as specified assets and liabilities, will transfer to a newly formed company upon closing. Ericsson and One Equity Partners are committed to a seamless transition for employees, customers, partners and suppliers.

The transaction is subject to customary closing conditions, including regulatory approvals.

Red Bee Media
Following an extensive review of strategic opportunities that was announced in March 2017, Ericsson has concluded the evaluation of strategic opportunities and has decided to remain as the owner and continue to develop Red Bee Media as an independent and focused media services business. Ericsson has evaluated different opportunities, including partnerships, divestments, and a continued in-house development, based on the value they generate for Ericsson.

During 2017, Ericsson has successfully been running a performance improvement program for Red Bee Media, and significant progress has been made, both in operational efficiency and cost savings. This has given increased freedom in choosing the most value creating option for the business.

The performance improvement work has included a legal separation of the broadcast and media services business, tactical and transformational initiatives, clarified positioning and the adoption of the Red Bee Media brand.

With the improvements carried out during 2017, and a new business plan with the underlying customer needs as well as market and technology trends, Ericsson sees potential and future upsides to Red Bee Media.

Steve Nylund, CEO, Red Bee Media, says: “Red Bee Media is already today a leading broadcast and media service provider, with a strong customer base among the top tier broadcasters and service providers. Our focus is now on improving and transforming Red Bee Media, in partnership with our customers, to enable our full potential as an independent and focused media services business.”

Full Year 2017 adjusted operating income for Red Bee Media was SEK -0.3 b. Full year revenues were SEK 2.5 b. Though still negative, the Q4 2017 adjusted operating income for the Red Bee business was significantly improved year on year, driven by cost and efficiency improvements. The Red Bee Media business will continue to be reported in segment Other.