Following the acquisition of Grass Valley, John Stroup, CEO of Belden was in Dubai to touch base with some of the companys key customers. BroadcastPro ME caught up with Stroup for an exclusive chat Tell us a bit about Belden and your role in the company since you took over as CEO? I have been […]
Following the acquisition of Grass Valley, John Stroup, CEO of Belden was in Dubai to touch base with some of the companys key customers. BroadcastPro ME caught up with Stroup for an exclusive chat
Tell us a bit about Belden and your role in the company since you took over as CEO?
I have been with Belden since October 2005. Prior to that, I worked at Danaher Corp, which is a large multi-diversified company. I am a mechanical engineer and most of my experience has been in general managerial positions in B2B industrial automation.
When I came to Belden, we sort of plotted a new course for the company. Everybody knew Belden as a high-quality cable manufacturer. We felt there was an opportunity to position ourselves as a signal transmission and signal management company. We really wanted to focus on three markets industrial, which continues to be important to us; enterprise, which includes LAN, structured cabling and data centre kind of applications; and broadcast. We have been in the broadcast market as a cable supplier for a long time.
In 2007, we successfully acquired a German company called Hirschmann, a global leader in industrial Ethernet equipment. It makes routers and switchers both wired and wireless for industrial automation, as well as for infrastructure like power transmission and distribution, alternative energy and thats what got us interested in the idea of specialised networking equipment.
We began to study that area more closely within broadcast. We got to know more people in the industry then and heard about Miranda. At that point, we were working on another acquisition in 2012 in Canada that didnt happen and thats when we ran into the folks at Miranda again. We eventually ended up buying Miranda and we are very happy with that investment.
After getting to know the Miranda team and talking more about how we could continue to build the platform, we got very interested in certain product categories especially switchers. I dont think the folks at Miranda thought they would ever be working with Grass Valley, but this has been an interesting development. We are very excited by this acquisition as it offers a lot of ways for us to evolve and improve our product line. The experiences we have had in helping our customers migrate from proprietary solutions to IP-based solutions in enterprise and industrial is something thats going to be very valuable to our customers as we help them migrate that in broadcast as well.
A lesser known fact is that Belden also acquired a company called PPC in 2012. PPC is a leading supplier of connectors for broadband applications. So, a lot of customers of PPC are also customers of Miranda and Grass Valley.
As the quality of delivery of video to the home becomes important in the region and as people begin to have higher expectations of what the quality of the signal is, then our kinds of solutions will become even more important because we focus on high-end quality products.
What changes have you brought into the company?
We have come a long way in the business. When I joined Belden, the revenue was USD 1.3bn. Now, it revenue is $ 2.4bn.
The companys financial statement looked a lot different and the gross margins were 20%, although now it is 37%.
Our cable products, which used to be 100% of the business, now brings in 35% of the revenue, because the company is now more diversified. Only a third of our business now is cable.
The beginning was tough. I wont say it was not fun but it wasnt very glamorous. We spent the first two or three years creating the business foundation that I felt we needed to be successful in the long run. We put in place modern operational techniques, modern financial systems and made a lot of changes in our information technology infrastructure.
The other significant change was the way we go to market. In the past, as a cable company, most of our products were transacted through distributors and most of it still is. Now, however, we have a significant number of sales people calling on users. The objective is to help our customers to make decisions on what product lines fit their applications. We spend a lot more time talking with our major end users.
On our other businesses, we have great relationships with the likes of Siemens, ABB, Emerson Yokogava and Petrogas. These are major corporations in industrial and enterprise businesses and we receive significant revenue from connectors and networking.
How do you intend to integrate Grass Valley and Miranda?
There is some overlap between the two companies, but not much. There wasnt a lot of controversy or surprise in deciding which product categories are stronger.
We talked with our customers on what we are planning to do with our routers and some of our playout products. We will eventually pick a platform but will not discontinue anything immediately.
Our broadcast business is the largest now owing to the recent acquisitions. Before that, industrial application was the largest revenue generator for us.
I would like to mention here that our industrial business is very similar to broadcast. Just like broadcast, industry downtime is incredibly important and end users here tend to choose technologies and vendors that stick with them and dont make things obsolete quickly.
Miranda and Grass Valley are strong brands, perhaps more than Belden?
We are very comfortable managing multiple brands. Grass Valley and Miranda are both well respected and very well-known brands. Having said that, Belden is a strong endorsement; its more than a 100 years old. It is a stable, predictable company that has a solid foundation. Belden is a $ 2.4bn company.
When we took over these brands, we did so with a long-term perspective and not purely for achieving short-term profitability. When companies buy through brand equity, their objective is to make money quickly on the investment within say, a period of five years.
We plan to be in this market forever. Belden would like to retain these brands and thats why we are focusing on customer relations.
When we combined Grass Valley and Miranda, I was very impressed that the Miranda team recommended we retain the Grass Valley brand. In the last four years, Miranda has developed very strong technology. It is seen as a modern, innovative and current brand. It, is perhaps, viewed as a stronger brand in the MENA region, but Grass Valley has been around since 1959 and has more recognition globally. Having said that, none of that takes away from Belden.
Its hard to be a global company if you are a $ 50m or a $ 100m company. As a $ 2.4bn company we can really invest in R&D. In this industry, the investment in R&D is significant. If I have the size to be a global company, then I can invest in R&D. The ideal investment of the combined company now is substantial which gives us the opportunity to innovate and differentiate and help our customers.
What is your strategy for the Middle East?
In almost every area in the Middle East, our focus will be on all three platforms broadcast, industrial and enterprise but we are stronger in broadcast than enterprise or industrial here. Our strategy is to strengthen all three. Many of our broadcast customers are potential customers of enterprise and industrial as well. We have global sales organisations for each of the three platforms.
Here in Dubai, we have three offices not because we want them but thats the legacy. Eventually, we shall bring the three together in one office because they have a lot of opportunities to collaborate.
How do you think Beldens experience in other sectors can support your broadcast business?
Most of the companies that we compete with offer services in one of the three sectors while we have a complete chain.
Most people in the broadcast industry are struggling with IP-based solutions. We have already done it in enterprise and industrial and eventually, our customers will use more IP technology.
The problem arises when a vendor understands one of these sectors and not the others. We have worked in all three and that gives us significant advantage.
Some of the companies operating in a similar space as us are traditional suppliers of switchers and routers but they do not understand industrial applications.
Are there any plans to make your solutions more open?
Open systems can be a mess if not managed properly. In the industry, you have to create certain standards. It is hard to say exactly how it is going to go but if there is a big customer who is taking it in a positive direction, there might be opportunities to collaborate with them.
Where do you see this industry headed?
We are likely to see more software-based applications and less hardware-based ones.
I am also very confident that the demand for video on a global scale will only go up. People want more content and there is a big emerging generation that wants higher resolution and higher definition, better quality and more flexibility.
The bigger challenge is evaluating the dynamics between content creation and consumption. Theres a lot going on there. I dont know who is eventually going to make it the satellite providers, MSOs (multi-system operators), major legacy networks or pay-TV organisations, the studios, or direct TV. Im not going to place any bets there. We have to be present in all these areas.