For the next 12-15 months, Belden and Grass Valley will continue to share the same space in Dubai until GV is transferred to a new owner, commented Shoulders.
Belden’s recent announcement that it is divesting Grass Valley will not impact broadcast customers in any way, GV President Tim Shoulders told BroadcastPro ME.
Tim Shoulders and other Grass Valley management will remain in their current roles and lead the company through this period of change.
“I am extremely excited to lead Grass Valley through this change-of-ownership structure. I find working in the broadcasting industry very exciting. Although the news came as a surprise to many people, the industry has been very supportive,” Shoulders commented.
When asked if the companies will operate independently given Belden’s announcement that it will immediately begin reporting Grass Valley as a “discontinued operation” on its income statement, Shoulders said Belden and Grass Valley have typically kept most customer-facing functions like sales and marketing, R&D and manufacturing operations separate in most countries.
“The Middle East is one of the few exceptions where Belden and Grass Valley have shared the same facility in Dubai and for the next 12-15 months, they will continue to share the same office. As long as we are part of Belden, we will not separate the office and there is no intention to reduce staff. It is in Belden’s best interest to ensure a seamless transition. The transition will likely last over a year and that allows us to continue to share resources,” he commented.
One of the reasons for the divestiture has been the unpredictability of the broadcast business, where customers often move project timelines from one quarter to the next, commented Shoulders.
“Though we have a great business and a great platform to grow, it wasn’t growing the way Belden envisioned it as broadcast is dependent on projects from a few big players. This made it difficult for Belden to predict revenues. With fewer projects in the market and them being priced very competitively, we have missed Belden’s group targets,” he commented.
He, however, clarified that the Grass Valley business is a profitable business although the inability to make accurate revenue forecasts made it especially challenging for Belden.
“The businesses that Belden purchased like Miranda, SAM and Grass Valley, and combined under the Grass Valley brand is today a healthy business and we generate good cash flow. At the time that Belden made these purchases though, these companies were generating more revenue than it is today, and this is because the broadcast market has been going through a very tough period. Over time, the business will evolve as the market evolves but the important thing is that this is not a distressed asset. Grass Valley enjoys a big market share in most categories.”
He added that the company is in the process of negotiating with potential investors and “we will be able within a matter of months to announce something”.
“What we are focused on doing now is shielding customers from any friction in cutting off from Belden. The Middle East is one of the few places that we share resources especially back-office functions and we will look at how to address those internally.”
He also clarified that Belden’s parallel announcement of a broad-based cost reduction programme that is expected to result in $40 million of annualised savings does not pertain to Grass Valley.
“The $40m cost reduction programme does not apply to Grass valley. We are not going through any cost cutting. In fact, it’s an exercise to replace the profitability that Grass Valley was contributing to the company.”
Read the previous release here for more background information.