Belden’s decision to buy SAM and combine it with Grass Valley continues a long history of acquisitions for both companies, but what are the challenges in merging the firms and what does the deal mean for the wider industry?

The announcement earlier this month that SAM (Snell Advanced Media) had been acquired by Belden, and will be wrapped into its Grass Valley brand was significant, if not entirely unexpected.

Grass Valley at IBC2017

Grass Valley at IBC2017

Since its initial statement on 8 February, Grass Valley has not provided much in the way of further detail about the deal, and in particular it has not revealed any financial details. More information will come when the deal is closed, probably around NAB.

However, industry analyst Joe Zaller of Devoncroft Partners has blogged that Belden has filed with US securities regulators that it paid $75.8 million, plus the assumption of $18.4 million, “for a company it acquired on 8 February 2018”.

For a company the size of SAM – it had 550 staff – containing some great brands, $94.2 million sounds on the face of it like a very good deal indeed for Belden.

SAM was the ultimate grouping of three world-class British brands. Quantel was a digital pioneer, creating the first digital framestore in 1975, which created a unique picture-in-picture effect for the 1976 Montreal Olympic opening ceremony.

At the same time Quantel was founded, Roderick Snell started Snell & Wilcox, which led the way in innovative electronics design in the industry. In 2009 Snell acquired Pro-bel, another UK company of the same vintage which specialised in routers and infrastructure products.

Both Snell and Quantel were owned by the same finance house, Lloyds Development Capital (LDC). Just before NAB in 2014 the investors took the logical decision to combine them. Legally, Quantel acquired Snell, but at the end of the process the branding became Snell Advanced Media, generally shortened to SAM.



Grass Valley is no stranger to acquisitions, either. Dr Donald Hare founded the business in 1959 and named it after the California town where it was based. Given that we think of GV as a video company, it may come as a surprise that its first product was a panoramic sound system for Cinerama.

Most notably, Grass Valley was part of Thomson for a number of years. This period also saw the acquisition of the broadcast business of Philips, leading Grass Valley to become market leader in system cameras as well as production switchers.

In 2014 Grass Valley became part of Belden, part of a string of acquisitions for the company we once thought of as simply a cable manufacturer. Other Belden acquisitions include Telecast Fiber (2009), Miranda (2012) and KVM developer Thinklogical (2017).

What was the rationale behind this latest acquisition? One important factor is that the three big brands which forged SAM were thought of as hardware companies. Certainly they had excellent software and were moving strongly towards the future, but their hardware history may have remained a burden.

Quantel, for example, was an extraordinarily successful innovator in the days when you needed very clever hardware to do anything in broadcast.

The Paintbox and the Harry finishing workstation sold as fast as the Newbury factory could build them. But the days of “charge anything you like for post production” coincided with the rise in power of standard computers, and maybe Quantel was too slow to change.

That said, SAM was developing excellent software products. Shawn Harrison of leading US market analysts Longbow Research  told IBC365 “SAM is likely a play on the acceleration of the broadcast IP transition. Belden views the transition to IP in broadcast as being in the first inning. Many Belden customers were slow to adopt IP technology utilising proprietary standards.”

Harrison also pointed out that this acquisition gives Belden the number one position in broadcast technology market share. “Belden has sales of approximately $400 million, versus Evertz with $384 million and Imagine Communications one-third the size of Grass Valley.

“Belden management has highlighted a bullish view of the roll-up potential of a fragmented industry, and the potential for accelerated growth once IP adoption becomes prominent,” he added. Longbow Research advice to investors is to buy Belden.

The big challenge must surely be the huge technology overlap between the former SAM brands and Grass Valley. My understanding is that the business is in non-stop strategy meetings around this, to be able to present some sort of plan at NAB.

To take just one example, Grass Valley has been the go-to company for production switchers since the Model 1400 of 1968 (which sold 400 in its first year). But SAM has recently won a lot of success in this market, too.

SAM Kahuna

SAM Kahuna

Duncan Payne of finance specialists Adamantean said: “In the relatively short time since the Quantel/Snell merger, SAM has made greater strides in the UK than GV ever did. SAM’s Kahuna seems to be the go-to vision mixer in the outside broadcast sector across Europe, which is a remarkable achievement in such a short period of time.

“In the M&A utopian guidebook, over the coming months the engineers from both businesses would pool their collective know-how to develop smarter solutions that the customer could see genuine benefits from,” Payne said, adding “but history indicates that most turn into a dystopian disappointment, particularly for the staff stuck in the political crossfire.”

Peter White, CEO of IABM, the body which represents vendors in the industry, said “I am not at all surprised by Belden’s acquisition of SAM. I also predict that this will be merely the first of a number of M&As on the supply side of the industry throughout 2018 and beyond.”

White pointed to the consolidation amongst traditional customers for this equipment, as they hone their businesses to compete with newcomers like Netflix and Amazon.

“This ongoing consolidation between media technology end users has resulted in decreased overall technology spending, simply because as companies merge, they consolidate their operations,” he said.

“According to IABM research, technology vendors have been spending significantly more in R&D, sales and marketing over the last couple of years to keep up with the industry shift from hardware to software.

“However, they are not seeing enough return on that investment. Profitability continues to fall.”

Payne points out that merged companies need to move very quickly to re-stabilise operations. This can be a challenge when an acquired business is in the Thames Valley and the headquarters is in Canada.

“Until the dust settles, it may play into the hands of the established Sony brand, or the challenger brand Ross Video, both of which will be ‘mildly interested’ in how this plays out,” Payne said.

The Ross Video differentiator of being privately owned and having David Ross front and centre in the day-to-day business has never been so apparent.”

Peter White

Peter White

Peter White echoed the formal announcement of the acquisition when he said “market presence will be enhanced, with an increased geographical footprint.”

On the other hand, as Duncan Payne cautioned, “Lots of competition is healthy, and leads to innovation. This deal reduces the competition in the big switcher sector by 25%.”

One final thought. The success of any acquisition depends upon cost savings when two become one. And often those cost savings are in people.

Or, as Payne put it, “perhaps the biggest unexpected winner in the immediate fallout of this situation could be the recruitment companies”.