NAB Perspectives: Vitec Videocom CEO Matt Danilowicz on mergers and acquisitions
With high-profile vendor mergers, acquisitions and ensuing consolidation emerging as perhaps the biggest theme of NAB 2014, who better to offer a perspective than Vitec Videocom CEO Matt Danilowicz? With much of the NAB discussion centered round fears that some of the big merger announcements would end up tears, Vitec Videocom has perhaps (a) a seemingly unique approach to and (b) arguably the best track record in the business in how to successfully assimilate acquired companies without killing them in the process.
At the show, Sports Video Group’s Fergal Ringrose caught up with Danilowicz to talk about the pattern of acquisitions we had witnessed – before the company’s own announcement that it has reached a conditional agreement to acquire Autocue. The prompting company will join other companies in the group including Anton/Bauer, Bexel, Camera Corps, Litepanels, OConnor, Petrol Bags, Sachtler, Vinten, Vinten Radamec and Teradec, which it acquired in autumn 2013.
Vitec has a unique approach to acquisitions in the marketplace. What’s your perspective on how you do it, and what you’re seeing at this show from others?
Yes there is a lot of talk about M&A. It’s tremendously interesting how other people pull these deals off commercially and technologically. A lot of the bankers covering this sector would tell you, ‘this is a sign that broadcast is incredibly robust — look at all this activity, people see opportunity because they are acquiring’. That’s great, and there is absolute truth to it. But there’s also absolute truth to the counter view, that this is just consolidation: there is a flat outlook there and business owners are either realising that it’s time to cash in or they have to gravitate to a company with more mass.
M&A is easy. Integrating companies, that’s really hard. Really hard. My perspective is the reason that Vitec is still one of the most profitable companies on the show floor is also because we’re also one of the least well-known. Nobody knows who we are! They know our brands, they know the businesses that we bought, but they don’t really see us – and that’s very intentional.
If you look at our recent acquisition of Teradek, the CEO of that business is still running it and he’s got a vision and he’s driving it forward. We’re helping him with support, back office, leveraging our channel and marketing. We’re helping him in every way we can, but the fundamental driver of the business is the same guy that got it to the point where it was sold to us.
The same would apply to the recent acquisition of the SIS Live Special Camera group, now part of your Camera Corps business?
These were some guys with great knowledge, they built a lot of that BBC RF group and did the Queen’s Jubilee and the Red Arrows and all these amazing specialised solutions. And again, we’re going to keep them in place and help them into the business. As part of Camera Corps they’ll continue to be very much entrepreneurial and drive the new opportunity.
So we have a very different philosophy to the conglomerate that wants to take something over, quickly extract the synergies and fire all the people with the big job titles who had all the good ideas! We’re not a great fit for those companies, and there are many of them here [on the show floor]. Others just want to cash out and be done. We don’t take too much interest in those deals; we’re interested in companies that want to keep going.
So a big part of your role is to evaluate possible targets and assess what you might buy — and why the company involved is selling?
It is a big part of my role but to be honest with you it’s something also that we’re devolving a bit more now in Vitec. Although I’ve worked at a lot of companies in this industry I only have so much perspective! But I’m now surrounded by a team of very senior people, many of whom are currently running Vitec businesses. I have this ‘war council’ and we talk about the opportunities; each of the team members has some unique expertise in areas like lighting or camera support and we try to bring all that knowledge together to make really informed choices.
Does that war council also look at the space you occupy, and ask ‘are we happy around the camera or should we be expanding our reach into other areas of the workflow?’
That’s a great question. Our perspective at this point is that we have really been focused on the acquisition part of the workflow. As you recall, I ran the broadcast division of Avid for many years back in the nineties and I ran iNews, so I know the software workflow business and I know how hard it is. What’s interesting to me is that you’ve got acquisition; post production and editing; and then you’ve got distribution. Vitec has very consciously stayed away from that middle part of the workflow because it’s very complicated, with low barriers to entry (just talk to my old buddies at Avid about that, in relation to Apple and Adobe). It’s very hard to maintain your strength because the software investment is so high.
What I believe is happening is that if you really look at that intermediate part of the workflow, it’s being disrupted by cloud applications and very low cost freeware applications. And now, it is very conceivable to go from the acquisition process almost directly to distribution because all of that infrastructure – the TV station, the network, all that area in between – suddenly you don’t really need it any more.
As a content creator, you can now get your content on air via the web or a variety of other routes that don’t require a lot of processing, transcoding and file conversion in the middle. Our great interest is acquisition – but also now we’re extremely interested in technologies that facilitate distribution. This is something that Teradek does very well, they help people go direct to streaming on the web thereby bypassing a lot of what you might have called the production workflow.
In parts of the market, you’re seeing a real death match going on [amongst vendors] – it’s not for the faint-hearted. For us there are more interesting companies playing more in the periphery of that, who are facilitating the new workflows of getting out to air through other means.