January 2013 Industry Overview
Transcription
January 2013 Industry Overview
January 2013 Industry Overview To Our Colleagues and Friends attending NAMM 2013 We look forward to meeting with you in Anaheim this week at the 2013 NAMM Show, and sharing our views on the industry and hearing your valuable perspectives. From a financial perspective 2013 is off to strong start. In 2012 we saw building momentum in the M&A and capital finance arenas, in general and within our business. We announced the sale of our client Radiant Grid to Wohler, and in December the $7m private growth equity financing of our media networking client Sohonet by investor FF&P Partners, both London based firms. At present we are actively engaged in a range of transactions involving M&A, capital formation, and “dual track” processes where our client seeks to choose from the most favorable option from either a sale or capital raise. Our current clients include leaders in broadcast, advanced audio solutions, video transport and advanced asset management, and are located in the US (on both coasts) and in Europe. Our NAMM presentation which follows provides up to date information on M&A and growth capital transactions in the audio and digital media markets. We highlight the performance of the major publicly held players in the media content lifecycle. We also discuss important current trends in the audio segment. Feel free to contact us during NAMM Show or afterwards to discuss your growth capital or strategic planning questions. Best, Ethan E. Jacks John C. Bowen Courtney Spencer Roland MacBeth Managing Partner MediaBridge Capital Advisors [email protected] 617.592.2739 Managing Partner MediaBridge Capital Advisors [email protected] 617.921.0075 Managing Partner CRX Partners [email protected] 201.320.7713 Managing Partner CRX Partners [email protected] 617.592.2739 MEDIABRIDGE 2 MediaBridge Senior Team Our principals have advised on more than 30 mergers and acquisitions in the media sector worldwide, comprising an aggregate transaction value of over $1 billion. Led by Ethan Jacks and John Bowen, our team has 50+ years of experience in media technology with unmatched expertise in the film, video, audio, broadcast, Internet, and new media markets. Extensive investment banking, corporate executive and legal experience Most recently drove Covington Associates’ expansion into the digital media and technology sectors Avid Technology Senior Executive (EVP Corp Development/M&A,CLO, CFO) from ‘99 to ’06. Led the Company in its most significant period of growth. Managed 12 strategic acquisitions, doubling the Company’s revenue to $1B and growing market cap from $400M to $2.5B 20+ years of experience in traditional and new media tech and 10+ years in venture capital and high tech Ethan Jacks Corporate development, finance, and legal background; BS and MBA from MIT and its Sloan School of Management; J.D., Georgetown University Law Center Extensive investment banking, equity research and operational IT experience Most recently led Covington Associates’ expansion into the digital media and technology sectors, representing both privately held and publicly traded companies VP Equity Research at FAC Equities covering digital media technology, networking hardware and software, and enterprise software companies. Previously at Sybase, McDonnell Douglas, and Digital Equipment Corp. Author of three significant industry research reports on media technology and CDN markets 10+ years of experience in traditional and new media technology, and 20+ years of IT Industry experience John Bowen BS Mechanical Engineering, Digital Systems concentration from University of New Hampshire; MBA from Babson College MEDIABRIDGE 3 Senior Advisors – CRX Partners Courtney Spencer and Roland MacBeth serve the media technologies industries as strategic and business development consultants. Both have played key roles in the M&A efforts of media technology companies, held key executive positions with consumer electronics and pro audio/broadcast firms, and consulted for some of the best-known companies in the electronics business. CRX and MediaBridge work to provide the best combination of strategic and transaction expertise to the professional and consumer audio/video markets 30+ years of executive experience in professional, broadcast and commercial audio Senior VP Business & Professional Group Americas (Allen & Heath, Calrec, D&M Pro), D&M Holdings Full time consultant, D&M Holdings (M&A and post acquisition integration focus) VP/GM, Professional Audio, Sony Broadcast & Professional Courtney Spencer 30+ years of executive experience in consumer, pro, and commercial AV Past and present consulting clients include: Gold Peak, Phoenix Gold, D&M Holdings, Mitek, Pioneer Electronics, Terk, Audiosource, KLH, DASH Navigation, XM Satellite Radio, Cerwin-Vega, Carver, Gibson President - Phoenix Gold International Senior Vice President of KLH Audio and Vice Chairman KLH Europe Executive Director of Sales and Marketing - Cerwin-Vega Roland MacBeth MEDIABRIDGE 4 Senior Advisors 30+ years experience in the media industry Current member of the Digital Media Strategy team as Cisco Systems Former Corporate Fellow and member of founding team at Avid Technology Former Chief Strategy Officer at Signiant Academy Award and two-time Emmy recipient for scientific and technical invention 25+ years experience in Technology, Media, Education, and Healthcare Chief Marketing Officer at Health Dialog and QuantiaMD 10 years advising Universities and diverse healthcare industry players 15 years at Forrester Research in both Research and Marketing executive roles. Graduated from Harvard University with a degree in Economics Tom Ohanian Mary Modahl Strategic advisor specializing in the evolution of the global IT market. Co-founded or lead several technology companies as Chairman or CEO including Reva Systems (acquired by ODIN) and Xedia Corporation (acquired by Lucent). Awarded “CEO of the Year” by Massachusetts Telecommunications Council Served on the Board of Directors for many venture-backed startups and industry consorita Graduate of Imperial College, London and an Associate of the Royal College of Science Ashley Stephenson MEDIABRIDGE 5 Senior Advisors Jenny Young du Pont Consultant in Private Equity and Hedge Fund industries In-house lawyer at Plymouth Rock Assurance in Boston, MA focusing on corporate acquisitions and commercial real estate Lawyer at Sidley & Austin, focusing on debt-derivatives and secured lending transactions. Served on the Boards of a variety of nonprofits, providing strategic advice and guidance on fundraising and development, financial, and governance matters A.B. from Princeton University and a J.D./M.S.F.S. magna cum laude from Georgetown University Angelo Santinelli 20+ years experience in business development, strategic planning, M&A, IPO, private equity, and international operations Founder of Dakin Management, a consultancy focusing on small and mid-size businesses Former Partner at North Bridge Ventures, covering communications, wireless and software Former Senior Executive at Shiva Corporation, contributing to a successful IPO, several acquisitions, and a rapid growth phase Adjunct Lecturer at Babson College and former Senior Lecturer at MIT Sloan Graduate of Fordham University with an MBA from Harvard Business School 20+ years in the entertainment industry including award-winning work as an editor, producer, and director Director of Digital Media and Technology at the University of Southern California’s School of Cinematic Arts Worked on numerous feature films including the Academy Award winning Harlan County, U.S.A. (1976), Arthur (1981), and Visions of Light (1992) Meri Weingarten MEDIABRIDGE 6 Transactions Transaction Closed During Employment with: * Covington Associates; ** Silverwood Partners; *** Avid Technology MEDIABRIDGE 7 Audio Markets Overview M&A – First Half 2012 Select Audio Transactions Date Jan-12 Jan-12 Feb-12 Mar-12 Mar-12 Mar-12 Mar-12 Apr-12 May-12 May-12 May-12 May-12 May-12 Jun-12 Jun-12 Jun-12 Jun-12 Target Name PlayOn AWAL UK Limited SoniVox R2M Music (Certain Assets) A-Line Acoustics Setlist.fm Imagine Research SRS Laboratories mSpot Cream Holdings Cull.TV Redmatica Instinctiv Trident Microsystems, MAP-Xtm Audio Product Line Turbosound Industrial Acoustics We7 (91%) Value Acquirer Name EMI Music France S.A. Kobalt Music Group Ltd. Numark BMG Rights Management Atlas Sound LP Live Nation Entertainment iZotope $148 DTS, Inc. Samsung Electronics Live Nation Entertainment Twitvid Apple SoundCloud ($MM) $1 - CSR Plc MUSIC Group Macao AEA Investors Tesco plc Audio Product Line Source Capital IQ, Press Releases, Public Filings MEDIABRIDGE 9 M&A – Second Half 2012 Select Audio Transactions Date Jul-12 Jul-12 Jul-12 Jul-12 Jul-12 Jul-12 Aug-12 Sep-12 Sep-12 Sep-12 Sep-12 Oct-12 Oct-12 Nov-12 Dec-12 Dec-12 Dec-12 Dec-12 Target Name Avid, M-Audio and AIR Division MOG Spin Media Rexly IMM Sound Nimbit Auracle Music Bleuel Electronic SoundField CSS Studios EMI Group Ratas Music Group McIntosh Laboratory KMP Holdings Liquid Spins Audiogalaxy B&S AudioGo Value Acquirer Name $13.9 inMusic (Numark) $14 Beats Electronics Buzz Media Live Nation Entertainment $26.8 Dolby Laboratories Presonus Ole MusicBox Sennheiser TSL Professional Products Empire Investment Holdings $1,929 Universal Music Group Sony Music Entertainment Fine Sounds $18 KT Music Corporation $10 Max Sound Corporation (MAXD) Dropbox $13 Buffet Crampon Blackstone Audio ($MM) Source Capital IQ, Press Releases, Public Filings MEDIABRIDGE 10 Growth Capital 2011-2012 Select Audio Transactions $20-200m $10-20m $5-10m $0-5m Source Capital IQ, Press Releases, Public Filings MEDIABRIDGE 11 Audio M&A 2011 - Select Transactions Value Date Target Name Jan-11 Feb-11 Feb-11 Feb-11 Feb-11 Apr-11 Apr-11 Apr-11 Apr-11 May-11 Jun-11 Jun-11 Jun-11 Jun-11 Jul-11 Jul-11 Aug-11 Aug-11 Aug-11 Sep-11 Sep-11 Sep-11 Sep-11 Nov-11 Dec-11 Dec-11 Dec-11 Pend The Reamp company Informationsteknik 3dB Research SAE Institute Pelika Business Music Oy Summit Audio Inc. BlueHaze Astro Gaming, Inc. Rockustics, Inc. Native Instruments DEI Holdings, Inc. MySpace, Inc. Shinwa International Intelix MWM Acoustics, LLC Yellow Tools (Assets) Naim Audio Ltd. Kungsbacka 57 AB Beats Electronics (51%) Dynamic Hearing Pty Free Field Technologies Coffey Sound Workplace AV Systems Division Loewe AG The Stanton Group DiGiCo UK Limited BigChampagne FAB Enterprise ($MM) $3 $293 $10 $11 $114 $35 $137 $19 $300 $5 $78 $15 Acquirer Name Radial Engineering Ltd Shure Incorporated Harman International Navitas Limited Mood Media Corporation Blue Microphones, Inc. XIX Entertainment Skullcandy, Inc. MSE Audio Group Management Buyout Charlesbank Capital Partners, LLC Specific Media, Inc. JVC KENWOOD Holdings, Inc. Liberty AV Solutions Harman International Industries Inc. MAGIX AG Focal-JMlab S.A. (nka:Focal & Co.) Skullcandy, Inc. HTC America Wolfson Microelectronics MSC Software Corporation Trew Audio AVI Systems LaCie SA Gibson Guitar Corp. ISIS Equity Partners Live Nation Entertainment Wizzard Software Corporation Workplace AV Systems Kungsbacka 57 Source Capital IQ, Press Releases, Public Filings MEDIABRIDGE 12 Trends to Watch Music and Audio 2012-2013 1. Emerging Mobile Tools: Mobile devices, including the iPad, are being increasingly utilized as replacements for, or extensions of, traditional user interfaces. Companies are also creating surprisingly powerful DAW and other music and sound-related apps for these platforms, competing with desktop solutions, if only at the entry level at this stage. As mobile platforms and software develop, many companies will place increasing emphasis on the very large hobbyist customer population. 2. Beyond Tablets and Desktop Studios: Larger format touchscreen products and other virtual work surface innovations will likely revolutionize the UI, while growing computational power, software innovations and AI will provide unprecedented processing power and ease-of-use. Meanwhile, some leaders in today’s DAW market are showing signs of vulnerability to attack from innovative competitors. 3. Music and Sound Creation Tools: Advances in sampling continue to narrow the gap between real and sampled instruments, while breakthroughs in synthesis and hybrid sampling technologies are facilitating the creation of an entirely new palette of instrumental sounds, and providing remarkable new tools for sound designers. 4. Consumer Audio: Following a period of apparent declining interest in sound quality in an age dominated by mobile music consumption, the dynamic growth of high-quality premium-priced headphones has pushed sound quality back to greater prominence, especially with young music listeners. Led by artist-endorsed brands like Beats by Dr. Dre and Soul by Ludacris, US headphone sales are approaching $1B/year. Other directional indicators include improved music encoding on the Amazon MP3 and the iTunes Stores (made practical by cheaper/larger storage). 5. Social Media: VC funding increasingly requires a social media story; companies are creating products as a means to build a social network, especially for the consumer music industry. Social media has also become a core music promotion and distribution channel, putting go-to-market tools in the hands of musicians themselves. MEDIABRIDGE 13 Publicly Traded Media Technology Companies Market Capitalization – Large Cap (In $MM) Adobe January 2004 January 2007 January 2010 January 2013 $8,998 Akamai $1,755 Autodesk Cisco Ericsson $34,391 $2,853 Naspers $1,523 Panasonic Sony $35,744 $36,017 $43,572 $47,450 $187,495 $23,310 $66,308 $8,547 $10,060 $6,493 $175,623 $18,787 $4,558 $5,991 $32,130 $14,673 $35,390 $33,905 $33,031 $23,818 $15,634 $13,369 $140,363 $18,802 $7,092 $8,426 $111,574 Adobe Akamai Autodesk Cisco Ericsson Naspers Panasonic Sony Enterprise Value EV / Revenue EV / EBITDA $16,772 3.8x 11.4x $6,626 5.0x 12.5x $7,207 3.1x 15.2x $82,916 1.8x 6.3x $27,327 0.8x 7.3x $25,544 5.2x 29.1x $28,162 0.3x 5.5x $19,036 0.3x 5.6x Share Price % 52 Week High $37.98 98% $39.96 94% $37.50 88% $21.02 99% $10.21 95% $61.78 95% $6.61 76% $12.78 63% Source Capital IQ MEDIABRIDGE 14 Publicly Traded Media Technology Companies Market Capitalization – Mid Cap (In $MM) Belden Demand Media Dolby Evertz EVS Harman RealD $126 January 2004 Rovi TiVo Yamaha $3,880 $1,273 $652 $1,388 $562 $5,156 $1,754 $844 January 2007 $817 $3,651 $1,148 $6,723 $1,070 January 2010 $797 $3,102 January 2013 $1,054 $2,607 $2,627 $1,167 $768 $3,115 $926 $5,730 $2,079 $4,301 $545 $1,768 $1,495 $2,024 $3,366 Belden Demand Media Dolby Evertz EVS Harman RealD Rovi TiVo Yamaha Enterprise Value EV / Revenue EV / EBITDA $2,666 1.4x 11.3x $655 1.8x 10.1x $2,330 2.5x 5.7x $954 2.9x 9.3x $741 3.9x 7.9x $3,066 0.7x 7.2x $531 2.4x 11.2x $2,429 3.6x 11.4x $1,044 3.7x -11.1x $1,696 0.4x 6.5x Share Price % 52 Week High $47.07 99% $9.02 72% $30.42 66% $16.45 94% $58.27 95% $49.62 94% $10.89 71% $16.49 44% $12.07 93% $10.57 98% Source Capital IQ MEDIABRIDGE 15 Publicly Traded Media Technology Companies Market Capitalization – Small Cap (In $MM) Avid January 2004 Brightcove $1,553 DTS Envivio $386 Harmonic JVC Kit Digital $493 Vitec Group VIZRT $228 $35 January 2007 $1,640 $387 $554 $421 $263 $241 $282 $502 $223 $113 January 2010 $560 $541 $649 $524 $128 $59 January 2013 $317 $335 $354 Enterprise Value EV / Revenue EV / EBITDA Avid $258 0.3x 15.0x Brightcove $282 3.7x NM DTS $253 2.5x 8.6x Share Price % 52 Week High $8.17 65% $12.24 48% $21.50 66% $500 $481 Envivio -$4 NM NM Harmonic $322 0.6x 7.4x JVC $889 0.2x 3.1x Kit Digital $112 0.5x NM Vitec $614 1.1x 7.6x VIZRT $151 1.1x 5.8x $2.18 22% $4.27 63% $3.47 70% $2.25 18% $11.69 99% $3.36 78% Source Capital IQ MEDIABRIDGE 16 Publicly Traded Media Technology Companies Market Capitalization – Small Cap (In $MM) Avid Brightcove DTS Envivio Harmonic JVC Kit Digital Vitec Group VIZRT $11 January 2004 $1,599 $325 $645 $273 $272 $78 January 2007 $1,520 $426 $624 $458 $273 $112 January 2010 $508 $511 $615 $458 $51 January 2013 $292 $256 $334 $277 $235 $24 $606 $505 $422 Avid Brightcove DTS Envivio Harmonic JVC Enterprise Value EV / Revenue EV / EBITDA Kit Digital Vitec VIZRT $220 0.4x 29.6x $231 2.8x -23.9x $283 2.8x 11.6x -$10 NM 1.2x $414 0.8x 10.6x $837 0.2x 3.0x $8 0.0x -0.3x $533 0.9x 6.7x $159 1.2x 6.3x Share Price % 52 Week High $7.49 59% $9.20 36% $17.84 56% $1.90 19% $5.23 77% $3.62 82% $0.39 3% $9.84 84% $3.53 81% Source Capital IQ MEDIABRIDGE 17 Publicly Traded Media Distribution Companies Market Capitalization (In $MM) Charter Comcast EchoStar Netflix Pandora $79,256 $84,233 $101,846 $90,715 $108,985 $32,879 $86,867 $47,277 $121,409 Sirius Time Warner Verizon $91,077 $3,703 January 2010 $1,645 $2,726 $2,608 $46,870 $7,966 $3,110 $5,508 $1,796 $16,455 $106,151 January 2013 Verizon $5,766 $1,555 January 2007 Time Warner $3,353 $1,605 January 2004 Sirius Charter Comcast EchoStar Netflix Pandora Enterprise Value EV / Revenue EV / EBITDA $20,860 2.8x 7.9x $151,786 2.5x 7.7x $4,060 1.3x 6.7x $5,110 1.4x 34.9x $1,715 4.5x -69.4x $18,333 5.6x 17.0x $63,965 2.2x 9.2x $218,869 1.9x 6.9x Share Price % 52 Week High $78.83 95% $40.27 100% $35.59 100% $99.17 74% $10.56 41% $3.16 99% $49.93 99% $42.54 87% Source Capital IQ MEDIABRIDGE 18 Publicly Traded Content Owner Companies Market Capitalization (In $MM) CBS Discovery Lions Gate News Corp. Scripps Viacom Walt Disney $429 January 2004 $50,766 $29,229 $24,711 $1,100 January 2007 $72,358 $8,976 $13,231 $7,483 $644 January 2010 $72,830 $17,971 $36,452 $25,684 $24,327 $8,844 $2,650 January 2013 $57,069 $29,188 $63,945 $94,187 Enterprise Value EV / Revenue EV / EBITDA CBS $30,664 2.1x 9.0x Discovery $27,913 6.3x 14.2x Lions Gate $4,028 1.9x 103.8x News Corp. $69,556 2.1x 10.3x Scripps $10,188 4.5x 9.8x Viacom $36,659 2.6x 8.9x Walt Disney $107,594 2.5x 9.8x Share Price % 52 Week High $40.42 95% $67.72 99% $18.14 98% $27.26 99% $59.02 89% $57.88 98% $52.34 98% Source Capital IQ MEDIABRIDGE 19 Global Reach, Vertical Depth Ethan E. Jacks Managing Partner MediaBridge Capital Advisors [email protected] 617.592.2739 (m) Roland MacBeth Managing Partner CRX Partners [email protected] 805.660.9135 (m) John C. Bowen Managing Partner MediaBridge Capital Advisors [email protected] 617.921.0075 (m) Courtney Spencer Managing Partner CRX Partners [email protected] 201.320.7713 (m) 20