The Gores Group, owner of the media tech company, is committed to its strategy of leading the media's transition to software-based IP production and distribution, say the newly named CEO Tom Cotney and man he replaced, Charlie Vogt, who will join Gores and look to expand Imagine's "product set" through mergers and acquisitions.
Imagine Doubling Down On IP, Execs Say
Last week, when Imagine Communications announced that Tom Cotney was replacing Charlie Vogt as CEO, the talk was that Vogt was being tossed by private equity owner The Gores Group because it had grown impatient with the company’s slow growth.
Not true, Vogt and Cortney said in an interview with TVNewsCheck.
Gores, they said, lifted Vogt out of the day-to-day CEO responsibilities so that he could, as a senior adviser to Gores, focus on acquiring other technology companies needed to expand and strengthen Imagine’s product line.
“Gores is definitely more than prepared to double down on their investment to take advantage of its position in the marketplace right now,” said Vogt.
Vogt said he sticks by what he told TVNewsCheck at IBC in the fall — that Gores is willing to spend “hundreds of millions” on mergers and acquisition.
“We need to be two things,” Cotney said. “One is bigger so our clients don’t have to worry about whether we are going to survive, and we have to have a more complete product set.”
Cotney spent 20 of his 30-year career partnering, selling to and competing in the telecommunications and mobile technology industries.
He served as general manager of the communications sector at IBM Global Services and has been a CEO and board member for a number of privately held companies.
Cotney was CEO of mBlox, a messaging company, in July 2016, when it was sold to CLX Communications.
The two executives declined to say what company or companies they may be targeting.
Think of a roulette table, Cotney said. “Do we put [our money] all on one number? Do we spread it across several numbers? That’s kind of where we are.”
And Imagine has been spending, on average, $70 million on R&D, particularly on advertising management and video playout, Vogt said, and it will continue to spending heavily on product development. “We are certainly not backing down on the investment we are making.”
Gores first bet on media technology came in 2013 when it bought the Broadcast Division of Harris Communications in a deal valued at around $225 million. It was later renamed Imagine.
Gores spun off the transmitter unit of Harris into an independently run company, GatesAir.
Vogt was named CEO in July 2013, replacing Harris Morris, a holdover from Harris Communications.
Vogt soon began executing a bold strategy. He would convince TV media companies that it was time to virtualize — that is, to transition from hardware-based SDI plants to software-based IP plants with private or public clouds — and then sell them the necessary technology.
Disney stepped up first, virtualizing the playout of all of its cable channels. And this year, Sinclair tapped Imagine to power cloud-based playout of its kids programming block — a tentative first step toward eventually virtualizing playout of Sinclair’s diginets and, possibly, the entire broadcast days of all of Sinclair’s stations.
But, in general, broadcasters’ acceptance of IP has been slow, leading to the speculation that Vogt and Imagine got way out ahead of the marketplace.
Vogt said that was not his perception. In fact, he said, the pace has been much as he expected and is accelerating, noting. in addition to Sony and Sinclair, that QVC, Al Jazeera and at least a dozen others he couldn’t yet name and making the move to IP with Imagine.
Vogt acknowledged that selling the IP transition is not easy. “This isn’t like moving from SD to HD or HD to USD,” he said. “This is a fundamental shift in the business models.”
But he was confident that it was only a matter of time before IP is commonplace. “They are going to get their arms around this new technology. They are going to get comfortable with this new technology.”
And when they do, he said, Imagine is “in a very unique position to capitalize on the opportunity.”
Cotney and Vogt declined to comment on reports that Imagine’s revenue this year will be down from 2016. However, Vogt pointed out that 75%-85% of Imagine revenue still comes from the sale of conventional gear, and that the IP revenue is growing at a healthy clip.
Like the media itself, the media technology industry is consolidating, Vogt said. And when all is said and done, he expects Imagine to be among those left standing.
On the supply side, said Vogt, “you need two or three very healthy, robust large-scale players that can take this next-generation evolution into the next decade or so.”
“The great thing about the Gores group is that “they are very entrepreneurial,” he said. “They have gotten to learn a lot about the space in the last few years and I think that they have come to the conclusion with the management team here that there is a unique opportunity here to be part of something much bigger and that is what we are going to go aggressively and pursue.”