Acquisition by DTS Gives Some Insight Into iBiquity's Business
In preparing for its
acquisition of iBiquity, DTS seems to have found much to be content with,
including the company’s financials. The pending acquisition, announced last
week, provides a bit more insight into the revenue side of iBiquity’s business.
DTS, a publicly held company, estimates that iBiquity’s revenue
for 2015 will be about $40 million to $50 million, according to investor
information on its website.
stations pay licensing fees for iBiquity’s HD Radio technology, but in the big
picture of iBiquity revenue, those fees are “a wholly immaterial part of our business
model,” iBiquity President/CEO Bob Struble told Radio World last week. “We make
our money on the sale in HD Radio receivers.”
DTS also lists iBiquity’s operating income for the year as $12 million–$18
million, with operating margins of 30% to 36%. And it noted $5 million of
annual interest expense from debt financing.
companies are expected to bring in $140 million to $145 million in revenue in
2015, with an operating income between $34 million and $38 million, DTS said. It
expects the acquisition to begin adding to its earnings per share in 2016.
The $172 million transaction will be paid for with a
combination of $135 million of new debt and $37 million in cash.
In announcing the acquisition, DTS listed reasons it finds iBiquity
attractive. They include robust technology, strong content and significant
penetration at top radio stations, in addition to an expanding footprint into
the automotive market and opportunities for growth in the mobile and
international markets. In its conference call last week
with analysts and investors, DTS also highlighted iBiquity’s more than 100
patents and related intellectual property items.
Ralph Schackart of William Blair & Co. said the iBiquity acquisition makes
sense from a financial perspective even more than for the strategic synergies. In
a note released Sept. 2 and reported by Investors.com, he wrote, “The combined
businesses should produce roughly $200 million in revenue and 30 percent-plus
operating margins, with financial synergy opportunities through the elimination
of redundant operating roles likely providing operating margin upside to our
base 30 percent assumption.”
DTS Cites Power of OTA Radio
in iBiquity Buy
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