Harmonic, a major supplier of tech to the pay-TV business announced this week that it is considering selling off its video business.
"Due to changes in the marketplace and our customer strategies, synergies between our broadband and video businesses are now less compelling," Harmonic CEO Patrick Harshman said in the company’s Q3 earnings call.
Harmonic entered the video business with the acquisition of Omneon, a provider of storage and transcoding technology in 2010. “Media companies are being driven by ever-increasing demand for video content coupled with consumers’ desire to consume video anytime and anywhere,” Harshman said at the time.
What seemed like a smart strategic move at the time has given way to the fact that cord cutting has forced cable companies to increasingly turn away from marketing themselves as video companies and more like data/broadband companies, with fewer and fewer subscribers opting for vMVPDs and/or streaming services instead. Providers to the industry, including Harmonic, have in recent years focused on the cable industry’s move towards next-generation virtualized DOCSIS 4.0 networks.
Harmonic is taking a formal review of its video business and has received several interested buyers. “Together with financial and legal advisors, we're assessing a range of alternatives for the video business with a clear goal of optimizing long-term value," he said.
Sales lagged for the company’s third quarter with Harmonic logging revenue of $127.7 million. The video division accounts for 40% of Harmonic’s business and its latest quarterly revenues of $51.4 million represent a nearly 20% decline, according to the company, which reported one bright spot: its cloud-based SaaS solutions represented by its VOS platform increased 42% to $12.5 million.
Its broadband business declined 17.5% in Q3 with revenues of $75.8 million, which Harshman attributed to several factors.
“We anticipated this third quarter revenue decline, for two related reasons,” Harshman said. “First, some customers who are bleeding down inventory positions established during the pandemic, and second, better than anticipated progress on DOCSIS 4.0 technology, was leading to a slowdown in DOCSIS 3.1 deployment plans in anticipation, of DOCSIS 4.0 rollout. This is all playing out largely as we had anticipated.”
Harshman added that for the company;s DOCSIS 4.0 strategy, “the progress has been stunning,” noting the success of the Harmonic’s cOS cloud-native software and the company’s work on edge devices.
Harmonic did not reveal a timeline for its review.
