Roark Sees Consolidation to Come
One broadcast equipment manufacturer says Harris Corp.’s decision to get out of the broadcast communications business will likely to be the first of several developments that could bring consolidation within the radio transmitter marketplace.
“Given today’s economic environment, it goes without saying there is a need for some consolidation because there is simply too much manufacturing capacity in the market for the current demand. Every company in the broadcast business has seen a downturn,” said Joe Roark, president and CEO of Broadcast Electronics.
Roark says he has spoken to numerous equipment maker CEOs and they all say the same thing. “There has been significant downward movement this year. Last year was a very strong year. [BE] saw significant growth during 2011. A lot of the growth from 2011 was coming from international projects and not domestic. The domestic market for at least five years has been in a significant funk.”
BE has been approached by suitors and approached others about potential deals, Roark said.
“However, our ownership group is not interested in selling because they purchased us three years ago with plans to grow and evolve the business into a larger and more broad-based business,” Roark said.
He described a current marketplace with “a lot of movement under the current where people have been looking at competition and making a determination on valuations and strategic fit. The TV business and other ancillary products intrigue us. We are very inquisitive in our review of opportunities right now.”
As for Harris, Roark figures everyone in the industry from big and small have wanted to take a look to see what Harris has to offer.
“We have been in touch with the investment banking group from Harris. We are not interested in some parts of Harris, like studios and editing products. Those sorts of things are not part of our strategic plan. The transmission part would be of interest to us. But they have indicated they want to sell it all in one bundle,” Roark said.
The softness in the general economy attributed to the Harris’ decision, he said.
“Financially, [the equipment division] wasn’t meeting Harris Corp.’s financial objectives that they had established. A lot of the consolidation savings and benefits that were intended through the purchases of other companies over the past decade really never materialized,” Roark said.
“They never consolidated them into a single entity. They left them all as free standing businesses. I think the decision to sell was an economic driven decision and not a strategic decision as Harris claimed,” Roark added.