Ericsson Sells Majority Stake in Media Solutions Unit

Ericsson has concluded a review of strategic opportunities for its Media division (Media Solutions and Red Bee Media), announcing that One Equity Partners will acquire a majority stake in that business.

Ericsson’s Media business includes Mediaroom, the IPTV platform acquired from Microsoft in September 2013, as well as MediaFirst, a next-gen, cloud-based video platform for MVPDs and OTT service providers.

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Financial terms of the transaction with One Equity Partners was not disclosed. The deal is expected to close in Q3 2018. 

Ericsson, which retains a 49% stake in the Media Solutions unit, said it completed its review following an evaluation of different opportunities for both Media Solutions and Red Bee Media, including partnerships, divestments and continued in-house development. Ericsson initiated the review in March 2017.

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Last November, Ericsson renamed its Broadcast and Media Services business unit Red Bee Media, setting off another wave of speculation that the decision was tied to possible M&A activity involving that division.

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Uncertainty about the future of Mediaroom and MediaFirst has caused some competitors to take advantage.

Cisco Systems, for example, has been pushing ahead with a Mediaroom replacement program that aims to convert some of those service providers to Cisco’s own cloud-based, multiscreen offering, the Infinite Video Platform. Cisco, which is in discussions with service providers about that program with plans to start trials soon, has said that Mediaroom users can convert to Cisco’s platform without swapping out their old set-top boxes.

RELATED: Cisco Attacks Ericsson’s Mediaroom Market (subscription required)

More Changes Afoot 

Ericsson announced the deal amid Q4 2017 financial results and a restructuring of its exec team.

Among the exec changes, Ericsson has created a Business Area Emerging Business unit to focus on “innovation and new business development,” with an initial focus on IoT and distributed cloud solutions.  Effective April 1, Åsa Tamsons will take on the role of SVP and head of Ericsson’s Business Area Emerging Business. Tamsons joins Ericsson from McKinsey & Company, where she has held the position as partner in McKinsey’s Stockholm office.

Ericsson is also streamlining its group function structure, from currently six functions to four. The majority of current Group Function Technology & Emerging Business, including hosted group responsibilities such as the CTO office and Ericsson Research, will form part of Business Area Emerging Business.

Starting February 1, current Group Function Marketing & Communications and Group Function Sustainability & Public Affairs will be merged into a new Group Function Marketing & Corporate Relations, headed by Helena Norrman, currently head of Group Function Marketing & Communications.

Ericsson said its Business Area Digital Services is “undergoing significant transformation to create a profitable and strong offering in this strategically important area,” and Ulf Ewaldsson has decided to step down from leading the unit, and assume the role as advisor to the CEO.

On the financial end, Ericsson said Q4 sales dipped 12%, and that it saw a net reduction of 10,000 employees and external workforce during the quarter.