To improve its cable-related sales, Tandberg Television plans to acquire N2 Broadband in early 2005. It also wants to make it easier for current broadcast clients to prepare for VOD-distributed content.
“We want to help content owners extract more value out of the content they own,” says Eric Cooney, Tandberg Television president and CEO. The deal is estimated at $120 million.
Tandberg, a Norwegian company, provides compression-related technologies such as encoders and decoders. Though it has found traction in the U.S. among broadcasters like ABC, NBC and Fox, it hasn't been as successful in the domestic cable head-end market, which is dominated by Harmonic and Optibase.
But Cooney is optimistic that Tandberg can build on its strong presence in the European cable market and establish an American beachhead. N2 Broadband, a company that has relationships with cable operators, is key to that strategy. Its VOD software products are used by Time Warner Cable, Cox, Comcast and Adelphia, as well as HBO, Showtime and Discovery.
“The good news is we don't have any technical barriers to entry in the U.S. market; it's all about sales contact and brand awareness,” Cooney says. He cites N2 Broadband's reputation and presence, noting Tandberg benefits from a new market route.
Reggie Bradford, president and CEO of N2 Broadband, will serve as president of Tandberg Americas. N2 Broadband, with annual revenues of about $20 million, is based in Atlanta; Tandberg will move its Orlando, Fla., office—and all 25 employees—there. The company's worldwide headcount will jump from 420 to approximately 560.
Bradford says existing U.S. broadcast customers will also benefit. With cable operators rolling out thousands of hours of VOD content, broadcasters need to do the same. The N2 Broadband system lets them export content to VOD, and offers unique features such as store and forward.
“The acquisition is about growing the market faster, not cost cutting or reducing employees,” Bradford says. “We both want to be better for our customers.”