Harris Corp. found a buyer for its broadcast business in relatively
short order, as Randy Stine reports in this issue of Radio World. The efficiency of that process and the announcement of its outcome are good news for customers and employees who understandably may
have been unsettled by the decision to sell such a legacy part of its business.
my eye, Harris Broadcast has long been something of a special case among U.S.
parent company is publicly held, so its financial reports are subject to open
scrutiny. The size of the division, if not unique in broadcasting, is uncommon
in radio; and its products are used widely around the industry. These factors
make the Harris broadcast business a market bellwether.
Also for those reasons, its business decisions, such as staff reductions
during soft markets, or changes in leadership and sales structure, tend to be
reported by the general and broadcast trade press, more so than at other radio
Such corporate changes have at times frustrated some fans of the
company’s legacy, who felt that upper executives (never the ground troops) were
not fully cognizant of Harris’ role in the history of our industry. The company
seems to attract a circle of past employees who are vocal about how it is
managed; this phenomenon is common with large business organizations but
unusual in radio manufacturing, where the majority of companies are relatively
Further, its size and reach sometimes made Harris Broadcast a target of
comment over the years by competitors who could not match its economy of scale.
And then there is the company’s long and rich history in radio. This has
engendered affection for the brand but also strong feelings about any change.
all of these reasons, the sale of its broadcast business attracts more interest
than others might.
comes The Gores Group.
Its website cites its “ability to create value in
situations characterized by complexity and operational challenges.” It says it
specializes in buying businesses that are undergoing “change in capital
structure, strategy, operations or growth and can benefit from Gores’
operational and strategic approach.”
It tries to buy companies that have “a defensible core business, mature
products or services, sustainable revenues, established customer relationships,
and that have reached a transition point in their lifecycle presenting an
opportunity for transformation.”
sounds like a reasonable description of Harris Broadcast (indeed, of
equity brings a different kind of management model. Will this new ownership
bring a shift in Harris products, resources or corporate culture? What kind of
an owner will Gores be; how well will it tolerate the challenges of the
broadcast market; how long is its horizon? How will these questions affect
Answers remain to be discovered. But Gores appears to be a careful buyer
that knows what it is doing, one that will not overpay. It has a broad spectrum
of interests, with current or past investments in networking and communications
firms, health care and women’s apparel. According to news reports, a proposed
buyout of Pep Boys fell through last spring; earlier it was in discussions to buy
some Borders stores before that company liquidated.
I would like to hear more about the buyer’s perceptions of the broadcast
marketplace (in which it is also active through its investment in Dial Global).
Does the driving force behind this purchase include a belief in the power of
radio and TV? Presumably yes; then why? What does Gores see, with its fresh
perspective, that makes broadcast manufacturing worth its money? Share your
vision with us.
Gores sent a welcome message of continuity in its early moves; and broadcasters
value continuity. They want a personal relationship with their manufacturers,
particularly RF suppliers. A station wants to know that the builder of that box
will be around in five or 10 years.
Of course, Gores could turn out to be an owner that
seeks to squeeze out costs and flip its asset to the next buyer as soon as
possible; that’s not the vibe I get, on admittedly early evidence. What
broadcasters want to see, and what Harris division managers appear to believe
they have, is an owner that will bring new resources as well as new flexibility
that might not have been possible under its previous corporate structure.
Nevertheless it seems realistic to expect Gores to make big changes at
some point, given that the new owner highlights “operational transformation” as
an important part of its strategy. And, because we’re talking about a private
equity firm, one founded “with the single vision to buy, fix and sell
businesses,” it seems reasonable to expect an eventual sale rather than decades
of Gores ownership, though such a process reasonably would take years.
some observers find the price Gores paid to be low considering past Harris
acquisitions that are now part of the division. If so, that is only good news
for the buyer, which for its money has acquired a strong brand, an established
product base, a broad international presence and talented people. This could
well turn out to be a value buy.
Recent years have been challenging for many broadcast manufacturers. The
industry they serve is subject to so many economic and marketplace headwinds; the
task of maintaining and growing an international business based on that
infrastructure is difficult and costly.
Harris Broadcast fans can hope that this transition will allow the company
to react to market forces more quickly and be freed at least from the unrelenting
demands of a public quarterly financial report; now it will face different
We’ll watch with interest to see how and whether Gores nourishes it to
encourage expansion and product development; or restructures to save money; or
some combination of both. We wish it success though. We’re pleased when any company invests in broadcasting; further,
this particular broadcast business holds a unique place in radio history; and
its ongoing challenges and successes will likely mirror our industry’s own.