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Spring 20102301 Rosecrans Avenue, Suite 4160, El Segundo, CA 90245 www.hadleypartners.com David Hadley President (310) 643-7090 [email protected]
Financial Review of the Media Services IndustryIn Reel Time
L O S A N G E L E S S A N F R A N C I S C O N E W Y O R K
I. Introduction
II. Transaction News & Reviews
III. Selected Hadley Partners Transaction Announcements
IV. Transaction Reviews: Harmonic to Acquire Omneon
Kudelski Acquires OpenTV
V. Welcome to our Blog!
VI. Relevant Public Company Valuations and Performance
VII. Overview of Hadley Partners, Incorporated
I. Introduction
II. Transaction News & Reviews
III. Selected Hadley Partners Transaction Announcements
IV. Transaction Reviews: Harmonic to Acquire Omneon
Kudelski Acquires OpenTV
V. Welcome to our Blog!
VI. Relevant Public Company Valuations and Performance
VII. Overview of Hadley Partners, Incorporated
Dear Readers,
We are pleased to provide you with our Spring 2010 issue of In Reel Time, an original publication by Hadley Partners,
Incorporated (HPi) for business owners, senior managers and institutional investors. Our mission is to provide analysis,
relevant financial information and insightful commentary on the media services marketplace.
In defining media services we seek to include companies that support the content ecosystem. Our landscape now
extends to seven sub-sectors: (i) systems (hardware and software); (ii) services; (iii) wireless services and applications;
(iv) production, post-production and visual effects; (v) measurement and auditing; (vi) publishing libraries; and (vii)
consumer-facing businesses.
Businesses (both within and outside media services), investors and consumers have watched our world get
whipsawed. Yet the media world continues to be one of the economy’s areas of opportunity, filled with both good
news and bad. Box office receipts are up; DVD sales are down. One million iPads were sold in the weeks following
its release; Veoh, almost $100 million invested into, was sold for a pittance and incorporated into Qlipso; Avatar has
unleashed a flurry of interest in 3D; we don’t have enough theater capacity to meet the 2010 3D release calendar.
Even the IPO calendar has picked up and we discuss a few such filings herein. And the sector has been active.
Indeed, in the best tradition of Hollywood, we had to leave some transactions on the cutting room floor to edit
this issue down.
As we sit here writing our spring introduction the stock market has officially entered a correction after months of
soaring. Lending remains strained (especially in the middle market) and politics is increasingly inserting itself into
our lives. What to believe?
What do we know? That spring follows winter, every year. Sometimes it melts snow earlier than expected,
replacing it with the first blooms of bright flowers. Other years winter lingers, chilling us all. Our media services
perch is a nice vantage point from which to view the world. Sure, traditional media businesses have to confront real
challenges keeping up with new technologies. But those technologies have also brought new opportunities and a
larger sector overall. Consumers are spending ever more time consuming media (now if only everyone in the value
chain could get paid).
In March our blog went live (http://www.hadleypartners.com/InReelTime/). So far traffic has been strong; we
appreciate your interest. In it, we’ve addressed some of the topics touched on above and throughout this newsletter.
With the activity level and excitement driving our sector these days we wanted the capability to address related topics
in an ongoing and timely manner. Comments and suggestions are always welcome.
David Hadley Megan Jones (310) 643-7090 (310) 321-7110 [email protected] [email protected]
I. Introduction
In Reel Time
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II. Transaction News and Reviews
Recent notable mergers, acquisitions and financings in the media services sector which we have arranged by sub-sector:
SYSTEMS (Hardware & Software)
May: Tektronix (TEK) acquired Mixed Signals, which had raised around $7.3 million from Palomar Ventures and RRE Ventures. Tektronix is a leading provider of digital content monitoring solutions. The acquisition will accelerate Tektronix’s ability to provide next-generation video testing and monitoring, particularly in the realm of IP video.
May: Harmonic (HLIT) agreed to acquire Omneon for $274 million. Please see details on page 7.
April: Avid acquired Euphonix, a manufacturer of large-format digital audio consoles and recording equipment. The acquisition allows Avid to deliver a broader range of audio- and video-control surfaces and consoles to its customers, from independent professionals to high-end broadcasters, across both audio and video applications.
April: Cisco Systems (CSCO) closed its $3.3 billion cash acquisition of Tandberg after receiving requisite anti-trust clearances in March. Tandberg enhances Cisco’s position in the video conferencing industry.
April: RealD, provider of stereoscopic 3D technologies, filed a registration statement for an IPO of up to $200 million. For commentary on RealD and the filing please see our blog post dated April 20.
April: Ankeena Networks, provider of online video delivery infrastructure solutions, was acquired by Juniper Networks for consideration reported to be just less than $100 million. Ankeena had been backed with $31 million from VC’s including Mayfield, Clearstone and Trinity. Its content delivery platform supports the distribution of video across mobile devices, PC’s and televisions.
March: Avaak, a company that develops video monitoring and networking products, raised $10 million in Series B funding led by Qualcomm, with existing investors Trinity, InterWest Partners and Leapfrog Ventures participating. This brings Avaak’s total funding to $17 million. Avaak recently launched its Vue system, which lets users use webcams to monitor their homes or businesses via the Internet or a mobile device.
February: LensVector took in $30 million, bringing total capital raised to $50 million. IVP led the round, joining existing investors Menlo Ventures, Samsung, SVB, Mitsui and Kodak. LensVector has created optical technology that can shape, steer and focus light without mechanical movement. That means it can create sharp autofocus images with a non-moving lens. The technology can be used in mobile phones, laptops, camcorders and other consumer electronics.
February: Motorola (MOT) completed its acquisition of BitBand, an Israel-based provider of broadband video management and delivery systems, specializing in VOD for IPTV. According to Motorola the purchase of BitBand will complement its existing on-demand product line, which includes content management and streaming servers for centralized on-demand networks. Late last year, Motorola also acquired SecureMedia, a company that specializes in digital rights management for IP video networks.
February: Google (GOOG) closed its acquisition of video codec company On2 Technologies. As profiled in our previous issue, Google had agreed to acquire On2 in August 2009 for $106.5 million. Google increased its price to roughly $133 million after pushback from On2 stockholders. In April it was reported that Google intended to open-source VP8, On2’s most recent video codec.
December: Gizmoz merged with Daz 3D. Gizmoz allows people to use its technology to create 3D-realistic avatar heads from photos of themselves. Meanwhile, Daz 3D makes vir-tual bodies. The idea behind combining the two companies is to tackle a new market altogether: the burgeoning economy within virtual worlds, social networks and online video games. Existing investors, led by Benchmark, Highway 12 Ventures and Columbia Capital, put an additional $5.3 million into the new company. Previously, Gizmoz had raised $12.8 million and Daz 3D had raised $4 million.
December: U.S. investor Symphony 3D Holdings acquired South Korean company MasterImage and renamed it Master Image 3D. Master Image 3D has supplied over 1,000 3D theater systems to exhibitors in 36 countries since 2004, and also enables 3D viewing on more than 300,000 mobile devices. Total capitalization of the company is $15 million; acquisition consideration and growth capital were not broken out.
SERVICES
May: Content delivery platform Limelight Networks (LLNW) acquired ad platform EyeWonder for $110 million. Consideration included $62 million cash, 12.7 million LLNW
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common shares and potentially an additional 4.9 LLNW million shares in 2011 depending on performance. EyeWonder helps interactive agencies and content publishers create, build, track and optimize rich media and interactive video advertising campaigns. Limelight also recently acquired video ad insertion firm Kiptronic in May for an estimated $12 million.
April: Edgecast raised $10 million led by Menlo Ventures. The company has raised a total of $20 million since 2007, counting Steamboat Ventures, Mark Amin (Vice Chairman of CinemaNow) and Jon Feltheimer (CEO of Lionsgate) as investors. EdgeCast, which has been profitable since the fourth quarter of 2009, competes with other CDNs to help websites around the world deliver multimedia (i.e. music, video, live stream, etc) to the end user.
April: Google (GOOG) acquired Episodic, an online video hosting platform. Episodic’s technology will be folded into YouTube, and its staff will join the larger company. Episodic’s publishing suite lets users manage and measure video content, and use the platform’s monetization services. This year, Google has also acquired online photo editor Picnik, Microsoft Office collaboration tool DocVerse, iPhone email app reMail and social search startup Aardvark.
April: 3Crowd, a startup that provides management tools for cloud-based services, raised $6.6 million in Series A financing from Canaan Partners and Storm Ventures. 3Crowd’s tools give enterprises greater control over content delivery and other cloud services, enabling them to use multiple services at once.
March: KIT Digital (KITD), a leading global provider of IP-based video asset management services for enterprise clients, acquired privately-held Multicast Media for approximately $18 million in cash and KITD stock. This transaction continues a string of acquisitions, following the purchases of Narrowstep, Visual Connection, Morpheum, Kamera, The Feedroom and Nunet. KIT Digital has also raised $70 million in two public equity offerings in 2010.
March: The Orchard (ORCD), a leading independent music distributor, executed a merger agreement to go private. The company’s largest stockholder prior to the agreement, hedge fund Dimensional Associates, agreed to acquire the 58% of the shares it didn’t own for $2.05 per share. The Company distributes music through 660 digital and mobile storefronts in 75 countries as well as at retail. For the year ended December 2009, the company generated revenue of $62 million and had a net loss of $18 million.
March: Digital Cinema Implementation Partners, or DCIP, completed a $660 million financing to fund the installation of 14,000 digital cinema screens across North America. DCIP is a joint venture owned by exhibitors AMC, Cinemark and Regal. This financing was intended for 2008 but was delayed by the downturn in the capital markets. The transaction included $445 million in bank debt led by J.P. Morgan and $135 million in junior debt. The three JV partners provided $80 million in equity.
Also in March, significant owners of Cinemark took $182 million of their chips off the table. Madison Dearborn, Syufy Enterprises, a trust affiliated with chairman Lee Roy Mitchell and other insiders sold shares amid investor enthusiasm for digital cinema and 3D.
February: Encoding.com raised $1.25 million from Meta-morphic Ventures and angels. The company provides online video encoding services on a SaaS basis for customers including MTV Networks, WebMD, Nokia and MySpace.
February: IVT, a SaaS company which supports live and on-demand corporate video webcasts, raised $5.5 million from Syncom Venture Partners, Barshop Ventures and previous investors Monitor and Tudor. Customers include Accenture, AT&T, Cisco and IBM.
December: NCR Corp. (NCR) acquired DVDPlay, an operator of DVD rental kiosks. DVDPlay had raised around $30 million from several VC firms. In 2009 NCR also acquired TNR Holdings, the second largest DVD kiosk operator in the U.S. after Red Box, and is using the Block-buster brand for this business.
December: WideVine Technologies raised $15 million, bringing its total capitalization since its founding in 1999 to over $80 million. WideVine offers video service providers digital content delivery and DRM solutions. Major customers include NetFlix, BlockBuster, Sonic Solutions and BestBuy (forthcoming). Liberty Global, Samsung Ventures and (reportedly) Echostar are participants in the December round; the company has numerous institutional backers.
WIRELESS SERVICES & APPLICATIONS
April: Nokia (NOK) acquired MetaCarta, and said it will use MetaCarta’s technology in the areas of local search and other services. MetaCarta’s solutions enable companies to bridge the gap between content and maps. MetaCarta also has a partnership with Microsoft to deliver map-based local news within the Microsoft Vine service.
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March: Nokia (NOK) also acquired Novarra, a company that develops mobile web browser technologies. Nokia, which makes its own browser, will integrate Novarra’s. During 2009, Nokia bought a number of companies including Plum, Cellity and Bit-Side.
March: RoundBox , a provider of mobile broadcast software, acquired the assets of Jacked, a provider of media interactivity solutions. RoundBox has raised $43 million in funding. Jacked had raised nearly $8 million from Core Capital, Gabriel Venture Partners and Provenance Ventures.
January: Good Technology acquired CloudSync for an undisclosed sum. Both companies enable corporate customers to manage their employees’ mobile devices – laptops, smart-phones, tablets – and related data. Good Technology also recently acquired Intercasting, a mobile social networking connectivity company.
December: Flurry and Pinch Media announced that they were merging to create the biggest (in terms of user base) mobile analytics platform on the market. As a combined company, Flurry and Pinch Media analytics services will be running on more than 80% of all iPhone, iPod, iTouch and Android handsets worldwide. Pinch Media had received seed funding from Union Square Ventures and First Round Capital; Flurry had raised $3.5 million from Draper Fisher Jurvetson and Borealis Ventures. In January 2010 the combined company raised $7 million.
December: Nuance (NUAN) acquired SpinVox for $102.5 million in cash and stock. SpinVox transcribes voicemails to text so they can be indexed and searched, and has a number of mobile carrier customers in Europe. Nuance is a speech recognition company and will integrate SpinVox into its platform. SpinVox raised $100 million a year prior to its sale at a valuation of $500 million and was reportedly having difficulty refinancing debt at the time of this transaction.
PRODUCTION, POST-PRODUCTION & VFX
May: Prime Focus is shutting down its post work in Holly-wood and will only be doing 3D work in that location. They are keeping their New York office open for dub work.
May: An affiliate of Telecorps acquired Laser Pacific from Eastman Kodak. Telecorps is a portfolio company of H.I.G. Capital, and has completed several acquisitions in the post-production and equipment rental space since 2007 (including Wexler, Coffey Sound, PostWorks, Orbit Digital
and Hula Post). Core Business Credit is providing an $8 million line to support the transaction. HPi owns a modest equity stake in Telecorps.
May: NEP Broadcasting, a portfolio company of American Securities and the nation’s leading provider of teleproduction services for live events, acquired Premiere Entertainment, a production company that specializes in live and taped broad-casts for the web. The company’s services will allow NEP clients to expand their Internet reach.
March: Image Metrics (IMGX.OB) went public and raised $8 million in a reverse merger transaction. The company’s software allows game developers and film and TV producers to create realistic human faces and expressions. Image Metrics was founded in 2000 and had previously been capitalized with $14 million. Clients include Activision-Blizzard, Electronic Arts, Sega, Take Two Interactive and Warner Brothers. The company generated $4 million in revenue in the year ending September 2009 and is growing rapidly.
January: AOL (AOL) acquired StudioNow in a cash/stock/earn-out transaction totaling $36.5 million. As we profiled in 2008, StudioNow has built an online marketplace where freelance editors, videographers and other creative profes-sionals help clients create video. The Company was backed by Claritas Capital and Clayton Associates. AOL will use StudioNow’s technology platform and its network of 3,000+ creatives to produce professional video, both for AOL produc-tions and for its advertising and content partners.
AUDIENCE MEASUREMENT & AUDITING
May: The Nielsen Company acquired GlanceGuide, a video analytics firm. GlanceGuide provides its customers with host-ed services that deliver analytics on how users consume video online, and Nielsen immediately integrated GlanceGuide’s offerings with its own online video measurement tools.
April: BlackArrow, a provider of advertising solutions for new TV platforms like VOD, DVR, mobile and online video, raised $20 million in third-round funding. Pay TV middleware provider NDS led the round, and numerous existing investors joined in. BlackArrow’s Advanced Advertising System allows content providers to manage ad campaigns across multiple platforms, and also offers the ability to tailor-fit ads to the content the viewer is watching.
April: Imagespan, whose LicenseStream platform offers content publishers a way to track and charge for the use of their pictures and videos online, hired a new CEO (Kurt Garbe) and
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raised growth financing. The company said the sum raised was under $5 million. Existing investors Bertelsmann Digital Media and CityLight Capital participated but previous investor Ackerley Partners did not. ImageSpan has raised more than $14 million to date.
February: Open Text (OTEX), the enterprise content man-agement company, bought content analysis startup Nstein Technologies for $34 million. Nstein’s Text Mining Engine helps businesses centralize, understand and manage content through semantic and text analysis. Last year, Open Text bought 3D interface innovator Vizible.
January: Quantcast, an analytics firm specializing in data about how to expand audiences for digital advertising, received $27.5 million from Cisco, Polaris, Founders Fund and Revolution Ventures. Total raised to date is $53 million. The funds will be used to build out its Quantcast Media Program, a marketplace to buy and sell advertising space based on real-time measurement.
December: The Nielsen Company agreed to sell its theater ticket sales data unit (Nielsen EDI) to Rentrak Corp. (RENT). The deal reportedly was valued at $15 million in cash.
PUBLISHING LIBRARIES
May: Private equity fund Terra Firm, EMI’s shareholder, agreed to invest another £105 million ($156 million) in the company to stave off an acceleration of Citigroup’s £3 billion in debt.
CONSUMER FACING
April: The Veoh saga ended when Israeli start-up Qlipso acquired Veoh’s assets out of Chapter 7. Copyright litigation with Universal Music Group proved too costly and distracting, even though Veoh had won a summary judgment. Veoh had been backed by Time Warner and Michael Eisner among others, and had operated an Internet television service in the U.S. and around the world. Qlipso bought Veoh’s assets to to integrate Veoh’s television audience and infrastructure with Qlipso’s interactive platform and social networking strategy. No financial terms were disclosed but the purchase price sure-ly wasn’t close to the approximately $70 million in venture funds that went into Veoh. Qlipso is backed by Jerusalem Venture Partners.
February: Streaming video site Ustream raised $20 million from SoftBank for a 13.7% stake. Softbank also received the
option to invest $55 million more by 2011. Previously, the site had raised almost $13 million in 2008 and late 2007. The capital will be used to expand geographically, particularly in Japan, China, Korea and India.
February: GameFly, the Netflix of games, filed for an IPO and plans to raise $50 million. It will trade on the NASDAQ under ticker symbol GFLY. GameFly reported revenue of about $47 million in the third quarter of 2009, compared to $39 million a year earlier. Operating profit for the quarter was about $6 million. The company’s backers include Sequoia and Tenaya Capital. The company has a library of 7,000 games and more than 334,000 subscribers.
February: Clicker, a search engine for online television content, closed an $11 million Series B funding round led by JAFCO Ventures, with existing investors Benchmark and Redpoint participating. The new round brings Clicker’s total funding to $19 million. Clicker doesn’t store content on its servers, but instead makes searching online content easier. Clicker’s index includes over 600,000 full length TV episodes spanning 10,000 shows.
February: Wal-Mart acquired Vudu, a provider of software for on-demand movie access via HD TVs and Blu-ray players. Vudu previously raised around $21 million in VC funding from Benchmark and Greylock.
January: Virtual world platform Metaplace closed its site on Jan. 1, making 70,000 virtual worlds disappear from the Internet.
December: Digital music start-up Imeem sold for less than $1 million, disappointing its VCs and record label Warner Music, which had invested (Warner also invested in Lala, which was acquired by Apple).
December: Hollywood Media (HOLL) agreed to sell its Broadway ticketing division to Key Brand Entertainment (producer and distributor of live entertainment) for $45 million. The transaction consists of $21.6 million in cash and assumed liabilities, $8.5 million in seller debt, up to $14 million in earn-out consideration and a 5% interest in the division. After the transaction closes, Hollywood will retain its ad sales division (including CinemasOnline in the UK), its 26.2% interest in MovieTickets.com, its IP division and contingent payments from both Broadway Ticketing and its previously sold Hollywood.com property.
December: LiveNation (LYV) and Ticketmaster (TKTM) got Competition Commission approval and their merger finally closed.
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III. Selected Recent Hadley Partners Transaction Announcements
technological capabilities in providing comprehensive
digital video infrastructure, from content acquisition
through workflow through delivery. The increasing
distribution of video across multiple platforms and
devices continues to spur growth in companies that support
such distribution. Continued consolidation is likely as
players try to increase the breadth of the solutions they can
provide customers.
Harmonic has 97 million shares outstanding, so Omneon
shareholders will own approximately 15% of the combined
company at closing.
Valuation – Harmonic Agrees to Acquire Omneon
(at announcement)
Omneon
Purchase Price: $274 million
Revenues 2009 (year ended Dec.2009): $105 million
Revenue Multiple: 2.9x
Kudelski SA Acquires OpenTV
On March 26, 2010, Kudelski SA, a Swiss provider of
content-protection and other digital TV technologies,
completed its acquisition of OpenTV Corp. (OPTV).
OpenTV’s stock was delisted and the company became a
wholly-owned subsidiary of Kudelski.
OpenTV is a leading provider of pay TV middleware and
advertising solutions. The company licenses its technology
principally to set-top-box manufacturers, TV manufactur-
ers and video network operators to enable them to offer
enhanced program guides, HD services, VOD, personal
video recording, home networking and interactive and
addressable advertising. The Company’s software has been
deployed in 133 million digital set-top-boxes by operators
in 96 countries including BSkyB and DISH Network. A
significant competitor is NDS, in which News Corp.
owns a stake.
7
In each of our issues, we highlight a few significant transactions
to illustrate how financial, strategic, operating, competitive and
other factors are affecting enterprise value. We welcome your
questions and comments.
Please also visit our blog at http://www.hadleypartners.com/
InReelTime/ for periodic transaction reviews.
Harmonic to Acquire Omneon
On May 6, 2010, Harmonic (HLIT) announced that it
would acquire privately held Omneon for $190 million in
cash and approximately 17.1 million shares of its common
stock. With Harmonic’s stock closing at $6.70 prior to the
announcement, the transaction implied an enterprise value
of $274 million (after deducting $32 million of Omneon
cash). HLIT’s closing price on May 17 implied a $258
million enterprise value. Both company boards have
approved the transaction and 66% of Omneon’s sharehold-
ers have agreed to a lock-up. The acquisition is expected to
close in Q3 2010.
Harmonic designs, manufactures and sells video systems that
enable service providers to deliver broadcast and on-demand
services. The company offers video processing products,
principally video encoders, transcoders and multiplexers,
as well as management control software. Key customers
include broadcast, cable, Internet, mobile, satellite and
telecom service providers. 2009 revenue was $560 million.
Omneon provides media servers and storage systems that
maximize workflow productivity and on-air reliability for
the production, distribution and management of digital
media. Customers include media, broadcast and pay
television companies around the world. For the year
ended December 31, 2009, Omneon’s revenues were
approximately $105 million (67% outside the U.S.). No single
customer represented over 10% of revenue. The company
raised approximately $95 million in venture funding over
twelve years with Accel as its lead investor.
The combined company will serve over 2,000 customers
across 100 countries. The acquisition expands Harmonic’s
IV. Transaction Review
Kudelski has been chasing OpenTV for a while. In January
2007 Kudelski gained voting control of OpenTV when it
acquired Liberty Media’s supervoting shares in the
company, but that stake only represented a 32% economic
interest. In February 2009 Kudelski offered $1.35 per share
for OpenTV’s remaining shares, but a special committee
of OpenTV’s board rejected that offer as inadequate. In
October 2009 Kudelski initiated a tender for all outstanding
shares at $1.55 per share, which represented a 17% premium
to the previous closing price.
The implied enterprise valuation at $1.55 per share was
$105.6 million, which represented 7.2x LTM EBITDA.
However, Kudelski paid $132 million for Liberty Media’s
32% stake in 2007, so its all-in cost to acquire the company
was significantly higher.
Valuation – Kudelski acquires OpenTV
Equity Value: $214.1 million
Cash (November 4, 2009): $108.9 million
Minority Interest: $0.4 million
Total Enterprise Value: $105.6 million
LTM Revenue (ending 9/30/09): $117.7 million
Revenue Multiple: 0.9x
LTM EBITDA (ending 9/30/09): $14.6 million
EBITDA Multiple: 7.2x
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V. Welcome to our Blog!
We’ve gone multi-media! In March, Hadley Partners
launched our In Reel Time blog as a companion to this
newsletter (http://www.hadleypartners.com/InReelTime/).
While the newsletter has always covered a lot of ground,
we can’t publish it often enough to do this dynamic sector
justice. Hence a blog and its real time capabilities (subject
to the FINRA requirement that all posts be reviewed and
approved before they’re posted).
We have already written on a wide range of subjects. Within
the investment banking basics category we have addressed
when to sell your company or go public, venture capital and
the current state of that industry, angel investors and general
fundraising.
Within media services itself we have covered RealD’s IPO
filing, industry shows (NAB, ShoWest, Digital Hollywood
and The Cable Show), Michael Lewis’ book The Big Short,
content, 3D, media and technology business models and
how they’re evolving and music libraries. We even posted a
video about technology in media through history.
We’ve learned a lot. What comes next? Well, more feedback
would be great - either on the blog comments option or via
email. Would guest bloggers be a good idea? More videos?
Music (legal downloads only!)? Would readers prefer more
investment banking basics or more media services posts (or
both!)? Any topics in particular?
Should we grab a Flip and start interviewing people?
On the lighter side, Megan’s favorite finding was the (much
covered on other blogs) video of a shark attacking an air-
plane (http://www.youtube.com/watch?v=SXiExCuHZDg).
Her latest blog post was on quality. Feel free to email
us after watching the video and tell us whether it makes
the grade.
http://www.hadleypartners.com/InReelTime/
V. Relevant Public Company Valuations and Performance
COMPARABLE MEDIA SERVICE COMPANIES
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Price5/17/2010
Market Cap.
Enterprise Value
Last Twelve Months Revenue EBITDA Margin
52-Week Prices High Low
($ in millions, except per share data)
Company
$14.88
7.24
64.23
34.10
5.84
tbd
9.72
$2.19
40.62
4.13
18.92
2.00
0.30
0.37
$32.66
17.50
25.16
$565.9
238.1
7,286.2
593.0
566.0
tbd
141.8
$1,565.2
$63.8
1,153.5
364.5
816.1
12.8
$482.1
12.0
58.1
$35.0
$869.3
542.6
265.4
$559.1
$491.7
102.5
6,515.2
514.1
298.2
tbd
108.1
$1,338.3
$311.2
1,202.0
215.6
1,644.3
15.3
$677.7
35.0
758.0
$396.5
$925.3
465.2
227.2
$539.3
$633.3 0.8 x
75.2 1.4 x
799.8 8.1 x
82.2 6.3 x
341.0 0.9 x
645.3 tbd
27.6 3.9 x
3.6 x
$78.2 4.0 x
203.7 5.9 x
134.6 1.6 x
391.8 4.2 x
62.3 0.2 x
3.2 x
$39.8 0.9 x
60.2 12.6 x
6.7 x
$382.4 2.4 x
133.3 3.5 x
88.4 2.6 x
2.8 x
($1.9) nm
(0.3) nm
407.9 16.0 x
26.9 19.1 x
23.6 12.6 x
14.5 tbd
3.6 30.2 x
19.5 x
$36.9 8.4 x
84.2 14.3 x
1.4 148.8 x
188.5 8.7 x
(2.6) nm
45.1 x
$0.6 57.3 x
(23.3) nm
57.3 x
$82.5 11.2 x
18.6 25.1 x
4.5 50.4 x
28.9 x
nm
nm
51.0%
32.7%
6.9%
2.2%
12.9%
21%
47.2%
41.4%
1.1%
48.1%
nm
34%
1.5%
nm
2%
21.6%
13.9%
5.1%
14%
$17.99
8.90
69.72
36.18
7.27
nm
10.05
$3.24
43.22
5.78
20.23
3.49
0.90
1.45
$33.52
19.58
26.00
$10.81
4.55
34.14
23.70
4.77
nm
5.85
$0.81
16.39
3.17
11.03
1.05
0.21
0.28
$14.87
10.18
9.70
Systems (Hardware & Software)
Avid Technology, Inc. (AVID)
Video editing, storage and management tools
DivX, Inc. (DIVX)
Video compression, security and distribution tools
Dolby Laboratories, Inc. (DLB)
Audio technologies
DTS, Inc. (DTSI)
Audio technologies
Harmonic, Inc. (HLIT) (a)
Video processing products
RealD, Inc. (RLD)
Stereoscopic 3D technologies
SRS Labs, Inc. (SRSL)
Audio technologies
Systems (hardware & software) Mean
Services
Cinedigm Digital Cinema Corp. (CIDM)
Digital cinema distribution & management
DG FastChannel, Inc. (DGIT)
Digital distribution of advertising & other content
Limelight Network, Inc. (LLNW)
Digital distribution of content
National CineMedia, Inc. (NCMI)
Digital content distribution network
The Orchard Enterprises, Inc. (ORCD)
Digital music publisher & distributor
Services Mean
Wireless Services & Applications
NeuMedia, Inc. (MNDL.OB)
Publisher and distributor of content via SMS, mobile
Nextwave Wireless Inc. (WAVE)
Owns 65% of Packetvideo Corp. (DoCoMo owns 35%)
Wireless Services & Applications Mean
Measuring & Auditing
Arbitron Inc. (ARB)
Radio media & marketing services
comScore Inc. (SCOR)
Digital marketing intelligence services
Rentrak Corp. (RENT)
Movie and pay TV information services
Measuring & Auditing Mean
V. Relevant Public Company Valuations and Performance
10
(a) Pro forma revenue for non-reflected impact of acquisition of Scopus Video Networks, Ltd. (b) Rainmaker Entertainment is traded on the Toronto Stock Exchange(c) Technicolor S.A. is traded on the NYSE Euronext Exchange
COMPARABLE MEDIA SERVICE COMPANIES
All Currencies converted into USD as of 5/17/2010
Price5/17/2010
Market Cap.
($ in millions, except per share data)
CompanyLast Twelve Months
Revenue EBITDA Margin52-Week Prices High Low
Enterprise Value
Production, Post-Production & VFX
Ascent Media Corp. (ASCMA)
Post-production and network services
Point.360 (PTSX)
Post-production services
Rainmaker Entertainment Inc. (RNK) (b)
Animation and other post-production
Technicolor S.A. (TCH) (c)
Post-production, distribution & network services & technologies
Production, Post-Production & VFX Mean
Consumer Facing
Hollywood Media Corp. (HOLL)
Live theatrical ticketing, movie ticketing & hollywood.com
IMAX Corp. (IMAX)
IMAX movie technologies, content & theaters
Live Nation, Inc. (LYV)
Live music company & next-generation music studio
RealNetworks Inc. (RNWK)
Digital media & music offerings and software
Sonic Solutions (SNIC)
Roxio digital media services
Consumer Facing Mean
$29.06
2.15
0.35
0.81
$1.15
19.60
13.43
3.94
12.57
$405.9
22.6
6.1
212.4
$161.7
$35.8
1,245.0
2,321.3
532.9
383.4
$889.1
$89.3
31.5
8.9
2,892.7
$755.6
$24.3
1,261.5
3,291.1
197.7
327.1
$1,124.3
$442.9 0.2 x
40.2 0.8 x
16.0 0.6 x
5,057.7 0.6 x
0.5 x
$103.4 0.2 x
210.2 6.0 x
4,419.1 0.7 x
550.1 0.4 x
110.2 3.0 x
2.1 x
$20.8 4.3 x
(1.2) nm
(2.6) nm
730.9 4.0 x
4.1 x
($1.3) nm
49.6 25.4 x
165.8 19.9 x
(17.9) nm
4.7 70.1 x
38.5 x
4.7%
nm
nm
14.5%
10%
nm
23.6%
3.8%
nm
4.2%
20%
$30.61
2.45
1.20
1.47
$1.76
21.30
16.90
5.41
14.02
$22.05
0.87
0.29
0.54
$0.98
6.52
3.98
2.44
1.34
-50%
0%
50%
100%
150%
200%
250%
300%
-50%
0%
50%
100%
150%
200%
250%
300%
May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10
S&P 500 27% Nasdaq Composite 38% Systems (Hardware & Software) 40%
Services 33% Wireless Services & Applications -9% Production, Post-Production & VFX 2%
Measuring & Auditing 90% Consumer Facing 240%
Hadley Partners is a boutique investment bank. With our experienced team of Wall Street veterans, we offer the following services to emerging-growth companies:
VI. Overview of Hadley Partners, Incorporated
Mergers and Acquisitions Advisory • Sales of businesses, or significant subsidiaries/operations • Purchases of businesses • Consolidations/industry “roll-ups” • Transaction sizes $15 - 250 million+
Private Placements of Equity • Institutional Private Equity • Venture Capital • Early rounds (after founders, “friends
& family” rounds) • Transaction sizes $5 - 50 million+
Financial Advisory
• Joint ventures/strategic business partnerships • Leveraged buyouts/management buyouts/recapitalizations • Debt financings • Non-transactional advisory and consulting services
Restructuring Advisory
• Family business restructurings • Debtor advisory • Creditor/investor advisory • Portfolio advisory (for significant institutional investors)
Our managing directors have worked on dozens of transactions for an aggregate value in excess of $50 billion, and each of them has more than 10 years of investment banking experience. We have completed transactions with a large number of middle market and emerging growth companies. We also have strong relationships with an extensive network of investing institutions that look to our firm for investment opportunities.
Not only does our firm bring Wall Street experience to each assignment, but we understand that Hadley Partners, Incorporated needs to go further for you than bulge bracket firms will go for their clients. We know that you don’t have the depth of resources that larger companies do, and you need more from your investment banker. We are prepared to provide that level of service.
For more information please contact: Megan Jones Hadley Partners, Incorporated (310) 321-7110 [email protected]
Hadley Partners, Incorporated2301 Rosecrans Avenue, Suite 4160 El Segundo, CA 90245
