SeaChange Wants to Shed VoD Content Unit, Too

Striving to become a pure-play software company, SeaChange will try to divest UK-based On Demand Group

Jeff Baumgartner, Senior Editor

March 29, 2012

2 Min Read
SeaChange Wants to Shed VoD Content Unit, Too

SeaChange International Inc. (Nasdaq: SEAC)'s selling spree may not be over.

A little more than a week after SeaChange announced the spinoff of its broadcast server business, interim CEO Raghu Rau said the company will try to sell off its media services unit -- meaning London-based On Demand Group (Nasdaq: SEAC). (See SeaChange Sells Off Its Broadcast Server Biz .)

Rau was speaking on SeaChange's fourth-quarter earnings call Thursday morning. (See Now SeaChange Loses Its President.)

ODG manages, acquires and aggregates video-on-demand (VoD) content for MSOs that serve more than 6.5 million households. ODG, whose customers include Virgin Media Inc. (Nasdaq: VMED) and Kabel Deutschland GmbH , reported revenues of $8.4 million in the fourth quarter, up 31 percent year-on-year thanks to new wins in Latin America and Eastern Europe. SeaChange sees the unit pulling down $38 million to $40 million in fiscal 2013.

A sale doesn't appear imminent, but it's in the plan. The unit has "exciting growth prospects, but [it's] not core to our future strategy," Rau said.

For now, SeaChange is keeping its video streamer and server business.

SeaChange is making changes as it tries to become a pure-play software company that makes back-office systems and client software for set-tops and IP-connected devices. Rau said Adrenalin, SeaChange's new multi-screen video back-office system, has 13 design wins. Cisco Systems Inc. (Nasdaq: CSCO) has emerged as a big competitor in this area following its recent acquisition of BNI Video. (See Cisco to Buy BNI Video for $99M and SeaChange Gives VoD a Shot of 'Adrenalin' .)

Rau said he expects the current set of moves to cut operating expenses by more than $15 million in 2013, about $2 million more than he originally expected.

Rau didn't say what SeaChange will do with its $93.8 million in cash and cash equivalents, but did rule out one possibility: "We will not do some big acquisition."

Looking ahead, the slimmer SeaChange is expecting full-year 2013 revenues of $188 million to $200 million, with software generating up to $160 million of that. It also expects non-GAAP operating income of $19.5 million to $23.5 million.

— Jeff Baumgartner, Site Editor, Light Reading Cable

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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