Harris Aims To Become “One”

Product and brand integration are the pitch for NAB
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Echoing a popular U2 refrain, Harris Corp. says it will market itself as “One” in the new year, part of an effort to show that it touches virtually every part of the broadcast workflow, from graphics tools to transmission equipment, with the notable exception of cameras.

Harris says its new structure should eliminate interoperability issues, simplify life for stations and networks, and streamline marketing under one brand. The company is still working to integrate the products it gained through a string of acquisitions since 2000: automation vendor Louth, traffic supplier Encoda, infrastructure vendor Leitch, encoding manufacturer Aastra and traffic vendor OSi.

“It is not our plan to run it as a portfolio of independent businesses but as an integrated-workflow model,” says Tim Thorsteinson, president of Harris’ Broadcast Communications Division.

He says the broadcast division, which has more than $600 million in annual revenue and spends some $100 million on R&D annually, is open to further acquisition if it “allows us to bring more products to market or broaden our customer base.” He adds that Harris has changed its sales approach to an account-management structure, under which one salesperson sells “a whole solution” as opposed to individual sales people handling different product categories.

One of Harris Broadcast’s strengths, of course, is that it itself is part of communications conglomerate Harris Corp., which serves a variety of government and commercial markets and has more than 13,000 employees worldwide. Harris Corp. has “had a great five-year run,” notes Thorsteinson, growing annual revenues from $1.8 billion in 2002 to $3.47 billion in 2006 and posting $237.9 million in net income, versus $82.6 million in 2002. In that same period, its stock has climbed from around $16 to more than $50.

Thorsteinson says the broadcast-technology business in general is the best it has been in his 13-year tenure in the industry, with the Leitch infrastructure line of routers, converters and servers providing double-digit sales growth attributed to stations’ and networks’ upgrade to high-definition. For the second quarter of fiscal 2007, ended Dec. 29, 2006, revenue in the Broadcast Communications segment was $155 million, up 14% from the previous year. Orders increased 29% to $158 million from second quarter FY 2006.

For example, Harris announced that Cox Television has selected Harris’ IconStation SD/HD on-air branding system and ADC Playout Automation software to handle high-definition graphics at the 15 stations it owns and/or operates. Cox has also selected Harris’ OSi-Traffic software to manage its stations’ traffic, sales, accounting and reporting functions. That is one of 12 new sales that Harris has netted for software from OSi, a company it acquired in April 2006 for $32 million.

The one soft spot for Harris has been transmitter sales, because most broadcasters have already made their digital-TV investments and the 500 or so stations that need gear for their final digital-channel assignments have been slow to make a move. As a result, Harris is actually cutting about 150 of 700 jobs at its transmitter-manufacturing plants in Quincy, Ill., and Mason, Ohio.

“[The division]’s soon to be called something else, as 'Broadcast’ ties us back to our transmission roots,” says Thorsteinson. “While we are glad those roots are there, the business has moved significantly beyond transmitters, and we will be positioning the business a little beyond the traditional broadcast name.”

Nonetheless, Harris isn’t giving up on over-the-air–broadcast technology. Harris VP Jay Adrick announced that the company is developing a mobile-television system designed to work within the ATSC digital-TV standard. The technology, which Harris is calling “Project Eagle” for now, would compete with the A-VSB technology developed by Samsung and Rohde & Schwarz and demonstrated at CES in January.

Sterling Davis, VP of engineering for Cox Broadcasting, buys both television and radio equipment from Harris and says he is generally in favor of Harris’ efforts to integrate product lines and employ a single-salesperson approach. “I have encouraged them to do that, and I’m glad they are doing it,” he says, adding, “though they’re not done.”

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