Harris is acquiring Encoda Systems--a provider of traffic and billing, program scheduling, automation and asset management systems for $340 million in a deal that should be complete by early November.
Harris says the acquisition will help it expand its automation, asset management and ingest systems by adding Encoda's automated advertising traffic, billing and scheduling technology into new markets beyond broadcast.
"Encoda will also give Harris reach beyond our existing customer base into new cable and satellite markets," said Harris CEO and President Howard Lance, who added that Encoda products will unlikely be "bundled" with Harris automation products.
While Harris--provider of transmitters and more recently, automation for master control systems--has the largest installed base in North America, Encoda has the largest installed base with international broadcasters.
Jeremy Weinsinger, president of Harris Broadcast said Harris will continue to support Encoda's installed base.
"We will support legacy products because these are back-office mission critical system, these customers are looking for a long-term platform," said Jeremy Wensinger, president of the Harris Broadcast.
"Just like with transmitters; there, we're looking at a 20-year commitment. These type of products don't necessarily have that long period of commitment, but rather an upgrade curve," he said. "You don't want to leave anybody behind. We're looking for an opportunity to communicate with these customers about where we're going. We will always design around an open set of APIs. Whether they buy an automation solution from us and not a traffic solution, it will still work seamlessly."
Encoda has offices in Denver, Colorado Springs, Grand Rapids, Mich., New York, Memphis and London. The workforce was reduced from 1,100 to 700 in the last several years. "We see very little redundancy," Weinsinger said.
After the acquisition, Harris earnings--excluding the one time of R&D and integration expenses--will be 12 cents per diluted share in the fiscal year 2005.
Encoda has more than $200 million in future revenue under contract. Revenue for the Denver, Colo.-based company was $124 million for the 12 months ending June 30, 2004. Company earnings before interest and taxes were $24 million.
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