Nothing against the French, but that ownership always seemed rocky. From my discussions with many GV personnel, the relationship between American and Technicolor’s French management was often strained. I more fully recognized one key symbol of the French style of management when GV press releases began listing the value of equipment sales in euros. I asked the Americans why a sale of equipment made in Grass Valley, CA, to a broadcast network in New York would be valued in euros. The paraphrased answer was, “Because that’s what they (the French) want.”
At last Grass Valley has a new owner, Francisco Partners, a San Francisco-based venture capital company. At an industry press conference in Secaucus, NJ, the new Grass Valley CEO Alain Andreoli (pictured) said the new management is committed to bringing Grass Valley back to its glory days and is prepared to invest millions over the long term to make that happen.
For the record, Francisco Partners claims it is a global private equity firm focused exclusively on investments in technology and technology-enabled businesses. The firm provides funding to reposition, recapitalize and rejuvenate companies. The company’s website says it is active in multiple technology sectors, including semiconductors, capital equipment, electronics components, systems and manufacturing, IT services and business process outsourcing, communications, security and enterprise application, and infrastructure software. The investment firm claims it has $5 billion in capital and the expertise to pursue enterprise investments ranging from $25 million to $2 billion.
Rough path to settlement
Negotiations with Technicolor continued over about nine months. Andreoli is a Frenchman with a background in successfully running large equipment suppliers, including Sun Microsystems Europe. Andreoli said he sees many similarities in the transition of the IT industry several years ago and the migration to HD (and beyond) for broadcasters today.
Andreoli called the negotiations “a pretty difficult period” and said the goal going forward is to make Grass Valley profitable within a year.
“The capabilities and skills within the company and its loyal customer base made us realize that Grass Valley is a company worth investing in over a long period of time,” he said, adding that Francisco Partners is prepared to invest in the business for as long as it takes to achieve profitability. It will earmark nearly 15 percent of Grass Valley's revenue for R&D and new product development to make that goal come to fruition.
“(Growing the Grass Valley business) will take years, and we're willing to support that and let the company flourish as an independent business,” Andreoli said.
He continued, “We want to drive an agenda for 'balanced' change, but understand that these things take time. We can see the strengths of the assets that the company has developed over the years and the strong relationship with its customers and its ecosystem. We felt this was the right time to step in and try to unleash the potential of a company that has not flourished very well under the Technicolor umbrella.”
When asked about how Francisco Partners would drive Grass Valley forward, Andreoli noted that Francisco Partners would provide a “go-to-market” strategy focusing on “global markets.” He also noted that there would be a new emphasis on “professional services” along with “software solutions,” versus just focusing on hardware. He said Grass Valley would be a market leader in file-based workflow, emphasizing a convergence of video with IT.
Andreoli said Francisco Partners was attracted to the broadcast market after seeing many vendors, with five of them in the half-billion and above range (in terms of revenue), supplying products. The Grass Valley business, he said, represents “an interesting door to enter this market” with its iconic presence of 50 years of innovation and its breath of products that make it a virtual “one-stop shop” for customers looking to deploy end-to-end systems.
Andreoli also emphasized two facts that many North American customers may not know: 70 percent of Grass Valley's business comes from outside the United States, and 60 percent of its staff works among Grass Valley’s numerous facilities overseas.
Under the changes, Jeff Rosica has been promoted to executive vice president and chief sales and marketing officer and is now responsible for the company's reseller channels and marketing activities worldwide; he will relocate to San Francisco. Ian Halifax has been named executive vice president and CFO. Together with Andreoli, they form the triad of executives that will lead the new business.
Several familiar names will retain their roles in the new business structure: Charlie Dunn, senior vice president and general manager of the editing, servers and storage product group; Martin Fry, senior vice president/GM of the routing and signal management product group; Marcel Koutstaal, senior vice president/GM of the cameras product group; Scott Murray, senior vice president/GM of the live production solutions product group; and Dave Perillo, senior vice president of global operations.
Andreoli said his team has a lot of decisions to make in the short term, “and we have begun to do that,” including the establishment of a new corporate structure of four main products groups and a professional services division.
“From the customers' perspective, they will not notice a lot of changes to the way they interacted with Grass Valley before,” Andreoli said. “What they will see is that the company is getting financially stronger and better able to innovate and address their individual requirements faster. I think Francisco Partners understands what it has in Grass Valley and wants to see it brought back to its glory days.”
What was missing from the Grass Valley press conference was any discussion of new products: That’s want these events are all about. When I asked Rosica about that, he said that the company preferred to surprise both clients and competitors at this year’s show. The joke (on the press) is that now everyone has to show up for the press conference to see what’s being introduced.
Jeff Rosica did say, however, that readers could look forward to some “teasers” in the electronic media prior to NAB.
That being said, if Andreoli will at least let Grass Valley publically list North American sales in dollars, I’ll give him high marks for a good start.