Struggling Digital Signage Tech Firms Wireless Ronin, Broadcast Int’l Merge
March 6, 2014 by Dave Haynes
I’d imagine the general sense of how consolidation will play out in the software side of the digital signage sector is that healthy, growing companies will acquire distressed or dying companies.
Probably not as anticipated are stories of two companies likely struggling to keep the lights on joining “forces” in a merger.
But the second one played out today, with news that Wireless Ronin and Broadcast International are merging. Both companies have been at the top of anyone’s pick list for a digital signage company dead pool.
However, if you are guided by press release prose, the “Merger Combines Exceptional Strengths of Digital Signage Industry’s Leading Technology Innovators”
Minneapolis-based Wireless Ronin has so far burned through roughly $100 million in investor capital as it has achieved this world domination.
Broadcast International, based in Salt Lake City, had an operating loss of about $3 million in the last four reported quarters, and took a huge hit when it lost its whale client, a big US bank.
The flapping red flag, about the size of a football field, I saw in a presentation involving BI was the sales team playing the McDonald’s card. When you tout Mickey D’s as your big client – when it’s well known the deal it relates to is dubious – that’s just not good.
How two wheezing companies that offer much of the same thing are better than one, I dunno. BI does have some unique IP withs its video compression codec, but I’m thinking that tech isn’t something that closes deals in the context of digital signage.
Here’s the release:
Wireless Ronin Technologies, Inc. (otcqb:RNIN), a leading digital marketing technologies solutions provider, has entered into a definitive agreement to merge with Broadcast International (otcqb:BCST), a leading provider of digital media and broadcast solutions.
Under the terms of the all-stock transaction, Broadcast International shareholders and other security holders (e.g., options and warrants) will receive approximately 36.5% of the outstanding shares of Wireless Ronin common stock calculated on a modified fully-diluted basis.
Based in Salt Lake City, Utah, Broadcast International brings to Wireless Ronin more than 20 years of experience delivering enterprise-scale digital signage solutions for large organizations, like Caterpillar and Washington Trust Bank.
Broadcast’s award-winning Managed Media Services (MMS) platform is a unified multi-channel solution that allows global enterprises to centrally manage and deploy digital media assets, including signage, posters, video, and music. The platform leverages Broadcast’s patented CodecSys software, a breakthrough, multi-codec video compression technology that reduces video bandwidth requirements and provides significant performance benefits. Broadcast’s digital signage solutions use CodecSys to optimize content delivery, thereby providing end users high quality video content across minimal bandwidth.
Broadcast also licenses a range of point solutions which, in addition to CodecSys, includes its Messaging and Music On Hold (MMOH) technology that allows companies to customize on-hold music as well as broadcast promotions and important information to its customers. Wireless Ronin believes that CodecSys, MMOH, and other Broadcast products will provide new licensing and revenue streams for the combined company.
“This merger combines the exceptional strengths of two of the industry’s leading technology innovators,” said Scott Koller, Wireless Ronin’s President and CEO. “Adding Broadcast’s technology to our RoninCast content management system creates what we believe will be the most comprehensive, synergistic offering in the digital signage industry. Moreover, we expect that it will provide tremendous cross-selling and upselling opportunities across our combined customer base.”
“We expect that this merger will also give us greater scale and a broader offering, which has become a critical factor in the highly fragmented digital signage industry. We believe that our combination with Broadcast will enhance our market scope through its deep experience deploying and managing large-scale digital signage solutions, while its CodecSys technology provides a strong competitive advantage to Wireless Ronin’s core business and offers attractive new IP licensing opportunities.
“Wireless Ronin brings to the table customer omnichannel marketing capabilities, which can be sold into Broadcast’s customer base and sales pipeline along with other extended solutions and services. Altogether, we expect the merger to provide valuable synergies and competitive advantages in terms of business development, geographical footprint and platform technology to more effectively capitalize on the multi-billion dollar market opportunity in digital marketing and signage.”
Wireless Ronin currently expects the merger to close in Q2 2014. The closing is subject to certain conditions, including the acquisition of required consents, the approval from the shareholders of Broadcast International, and other customary conditions.
Wireless Ronin’s president and CEO, Scott Koller, and SVP and CFO, Darin McAreavey, will lead the combined company, and expect Broadcast director Don Harris will join the board of directors upon closing.
Mr. Harris has more than 20 years of experience in the IT services and telecommunications industries, including serving as president of Comcast Cellular Communications, as well as senior management positions at PacTel. He also previously served as chairman, CEO and president of UbiquiTel, a leading provider of digital wireless personal communications services and NASDAQ-listed company before it was acquired for $1.3 billion by Sprint in 2006. Mr. Harris is currently president of 1162 Management, a private equity firm.
The news has given some new investors a nice little bump on RNIN shares, which were up 25% in mid-afternoon trading, to $1. Problem is, 4.5 years ago RNIN was trading at just shy of $20.