Ericsson (ERIC) is planning to acquire U.K.-based media company Red Bee Media. Through this acquisition, Ericsson plans to expand its broadcast services and thereby extend its technology to broadcasters to merge video and mobility. Post-acquisition, the business will be included in Ericsson’s Global Business Unit.
Red Bee Media’s offerings include media asset management, digital video publishing, metadata services, multilingual access services and creative services to major broadcasters and broadband platforms. Red Bee Media is the largest editorial metadata provider in Europe and its high-quality play out services is very popular. The company delivers over 100,000 hours of subtitling per year for broadcasters.
Banking on this acquisition Ericsson expects to create value for its broadcasters by making digital content easily and conveniently accessible. Ericsson plans to capture the growing opportunities in the television and media industry.
The industry is continuously undergoing transformation as consumers these days demand rich, interactive, and anytime-and-anywhere entertainment. Hence, the convergence of communications, broadband and media technologies along with the use of IP and mobile networks are able to generate and deliver such experiences, thereby creating new opportunities in the industry.
Video traffic presently has been showing a strong momentum in the mobile networks and Ericsson is addressing the need of both broadcasters and telecom operators through its technology expertise and services capabilities. According to Ericsson Mobility Report June 2013, video is the single-biggest contributor to mobile network traffic and this is expected to grow 60% annually until 2018 end.
Ericsson is a leading provider of managed services for telecom operators over the past 15 years. Recently, the company has also used its successful business model across other industries, such as utilities, transportation and the TV industry.
Ericsson has been making strategic acquisitions to strengthen its position. Most recently, Ericsson signed an agreement with Microsoft Corporation (MSFT) to acquire the latter’s TV solution Mediaroom business for an undisclosed sum.
Through this acquisition, Ericsson intends to become the leading provider of IPTV (Internet Protocol TV) and multi-screen solutions. Prior to this, Ericsson acquired the telecom & Media subsidiary of a France-based consulting company, Devoteam. This acquisition was in line with Ericsson’s services strategy to expand its IT capabilities.
Ericsson currently has a Zacks #1 (Strong Buy). Other wireless equipment stocks worth a look are Ubiquitous Networks Inc. (UBNT), having a Zacks Rank #1 (Strong Buy), and Mitel Networks Corporation (MITL) with a Zacks #2 Rank (Buy).
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