Interview with Tim Shoulders, president of Grass Valley: potential buyers, impact for customers and more

Tim Shoulders, president of Grass Valley

A new era for Grass Valley

Last week, Belden Inc. announced its intention to sell Grass Valley as part of a strategic review by Belden of its businesses. The move will enable Grass Valley to move forward with its own strategic plans. The immediate priority is for Belden and Grass Valley to find a suitable buyer.

Here Tim Shoulders, president of Grass Valley talks about what the announcement means for the company and why he believes this is exciting for Grass Valley customers, partners, resellers and employees.

What does this news mean for the future of Grass Valley?

I am excited to be given the opportunity to lead the Grass Valley business through this important transition. At Grass Valley, we offer the most technologically advanced, end-to-end broadcast workflow solutions in media. Our business has been strategically innovating and evolving its product offering to address new customer requirements including cloud-based and software-as-a-service solutions. We believe these investments position the company to lead in the media industry’s continuing evolution. This belief is supported by customer interest and engagement obtained over the last several quarters.

Who are the potential buyers of Grass Valley?

Belden has been in talks with potential buyers of Grass Valley throughout 2019, the majority of which are private equity investors without a major stake in any businesses that compete with Grass Valley. There’s strong interest in Grass Valley for a number of reasons.

First of all, we are a healthy business. They’re not buying a distressed business that they need to sort out; with our two-digit EBITDA, we are already strong and profitable. We’ve got an enviable customer base, one of the strongest in the world. Potential buyers have had sight of the technology roadmap and some of the introductions that are coming out in 2020 and that’s where there’s been particular excitement in terms of our next-generation technologies. When you put all that together, it’s a pretty compelling package for an investor. The likely outcome is a new private-ownership structure and a seamless transition for customers, who ultimately should not notice who owns a business as long as the quality and delivery of products remain at a high level.

Private equity is an attractive option as it allows a company to drive growth. The potential private equity sponsors we’re talking to understand it’s a cyclical industry that requires a lot of R&D investment to make it run and keep the innovation engine going. When you are a public company or part of one, you have to constantly be aware of the balance between growth and profitability and there’s limited flexibility to compromise either. A private ownership scenario would give us the flexibility we need to continue our focus on innovating to lead the industry forward.

Promo pic with the vision and mision of Grass Valley GV

How is the market changing and what is the impact for your customers?

Things are changing as purchasing models go from capex to pay-as-you-go and from proprietary hardware to COTS hardware. We are changing to meet new market demands that are going to cause some disruption, like the J curve. Going through those changes as part of a public company is difficult as you need to deliver results for shareholders. We will be able to more readily do that under private ownership, and we can help transform the business going forward.

What does this mean to your customers? Will they experience any disruption in ongoing activities?

Meeting the needs of our customers remains our highest priority. We are focused on shielding customers from any friction in cutting off from Belden. We will continue operating in “business as usual” mode; the current Grass Valley management team will remain intact and customer-facing roles — sales, marketing, R&D — will not be impacted because those functions are not shared the way accounting and other back-office functions are. Belden will likely maintain a financial interest in the on-going business, as well. So, they’re committed to continue providing essential back-office and other corporate services through the eventual sale, and beyond.

Will this announcement impact Grass Valley’s status as the industry’s R&D powerhouse?

Grass Valley has historically been well-known for its technology innovation and investment in R&D, and we expect the new owners to understand the importance of continuing this focus; especially given the transformation that the media industry is going through. Belden helped lay a good foundation for those future efforts by instilling discipline, right sizing, and helping put Grass Valley in the top quartile of the industry in terms of profitability.

SaaS and cloud-based services will be core to our strategic plan, and no one can do it better than us because we have such a broad product portfolio. We are building out solutions that drive value and create new operational efficiencies. We are committed to making a big splash at NAB 2020 with key product launches and lots of exciting things planned.

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