Ericsson Seals Red Bee Media Deal - Analyst Blog

Ericsson ERIC recently completed the acquisition of U.K.-based media company, Red Bee Media. Through this takeover, Ericsson intends to enhance its broadcast services and extend its technology to broadcasters to merge video and mobility. The Red Bee Media business will be incorporated into Ericsson's Global Business unit and U.K. will become a major media hub for the company. The deal was initially announced in Jul 2013.

Red Bee Media offers media asset management, digital video publishing, metadata services, multilingual access services and creative services to major broadcasters and broadband platforms. It is also the largest editorial metadata provider in Europe and its high-quality play out services are very popular. The company delivers over 100,000 hours of subtitling per year to broadcasters.

Banking on this purchase, Ericsson expects to create value for its broadcasters by making digital content easily and conveniently accessible. The company plans to capitalize on the growing opportunities in the television and media industry. The industry is continuously undergoing transformation with the growing demand for 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 capable to delivering such services, thereby opening up new avenues.

Of late, video traffic has been witnessing a strong momentum in 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 biggest contributor to mobile network traffic and this is expected to grow 60% annually till 2018-end.

Ericsson, a leading provider of managed services for telecom operators for the past 15 years, recently implemented its successful business model across other industries, such as utilities, transportation and television.

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, 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 also in sync with Ericsson's services strategy to expand IT capabilities.

Ericsson currently has a Zacks #4 (Sell). Some better-ranked wireless equipment stocks worth a look are Ubiquitous Networks Inc. UBNT, Polycom, Inc. PLCM and ShoreTel, Inc. SHOR. All three have a Zacks Rank #1 (Strong Buy).

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