Ericsson outlines Red Bee Media plans, new majority owner in Media Solutions
Ericsson has commented upon the conclusion of an extensive review of strategic opportunities for its Media business – 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.
During the course of the review, Ericsson evaluated different opportunities for both units, including partnerships, divestments, and continued in-house development, based on what generates the best long-term value for Ericsson. As a first step in assessing strategic opportunities, Ericsson implemented substantial performance improvement programs while continuing to invest in the respective business. Both units are reported to have made significant progress during 2017.
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.”
New majority owner for Media Solutions
In order to further develop Media Solutions, Ericsson has partnered with One Equity Partners, a private equity firm with extensive expertise in media and telecom investments, in a deal that sees Ericsson retain 49% of the shares in the company. This structure, says Ericsson, will establish Media Solutions as a leading independent video technology company with strong and committed financial support driving continued investment in innovation and growth. The terms of the transaction are confidential.
Ericsson and One Equity Partners will form an independent company and will develop the business in line with its new business plan. The performance improvement initiatives initiated in 2017 will continue, and are said to be showing tangible results. Meanwhile, Media Solutions employees and contractors, as well as specified assets and liabilities, will transfer to the new company upon closing. Ericsson and OEP state that they are committed to a seamless transition for employees, customers, partners and suppliers.
Closing of the transaction is expected in Q3 2018 and is subject to customary closing conditions, including regulatory approvals.
Red Bee Media
During 2017, Ericsson has also been running a performance improvement programme for Red Bee Media (former Broadcast and Media Services), and reports that significant progress has been made, both in operational efficiency and cost savings.
Ericsson says it will continue to develop Red Bee Media as an independent and focused media services business, with the execution of the performance improvement and legal separation activities, initiated in 2017, as top priorities.