For publicly traded companies, bigger is better
Sep 16, 2005 2:16 PM, Beyond The Headlines e-newsletter
With the news that Harris had decided to buy Leitch, and months earlier, Avid’s purchase of Pinnacle Systems, it appears that the large, multifaceted conglomerates of the mid-to-late-90s are making a come back. Yet what’s behind this increase in company size has little to do with technology. It’s all about the stick price, shareholder value and reach. These companies are beholden to the shareholders to grow the company, and acquisitions are the quickest and most reliable way to do that.
Indeed, according to executives at Avid, Harris and Leitch, “bigger is better” for capturing new business. They all claim that offering end-to-end systems helps them win accounts by offering a smaller piece to the puzzle.
For example, Tim Thorsteinson, vice president of Leitch (who will remain in his position), stated that a major deal with ABC would not have come to fruition had Leitch not acquired Inscriber Systems earlier this year. He also said that he was considering buying a small automation company before the Harris offer came about.
With the Leitch acquisition, Harris is now better positioned to attract more business, he said, in markets it didn’t address before. As an example, before the announced acquisition plans, Leitch had one person on staff to handle the government market. Harris, a long-time supplier to the military, has several hundred.
David Schliefer, vice president of Avid Broadcast and Workgroups, expressed similar sentiments, saying with the assets of Pinnacle under his belt, he’s now able to have “different conversations with customers, ones that are not solely based on price of equipment but on solving broadcasters’ problems.” he said. Jeremy Wensinger, president of Harris’ Broadcast division, said customers increasingly want a single supplier that understands the entire production/broadcast workflow and can actually do something about it without having to bring in a third party.
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