The closing of MediaKind’s acquisition of Harmonic Video is an opportunity to reflect on the journey of both organizations through the corporate tumult of the past twenty years of video compression and distribution, ponder the implications to the current market environment, and – to an extent – applaud the participants.

MediaKind paid $145 million in cash for Harmonic’s Video Division. For the calendar year 2025, the Video Division’s revenues were $210.3 million, and segment operating income was $20.3 million (~10% operating margin). Year-over-year revenue growth was just over 10%. A profitable, growing business with material market share, a strong brand (as confirmed by Big Broadcast Survey), and a substantial base of subscription revenue (30%+ of Q3 2025 revenue) then priced at 0.68x trailing revenue and 7.1x trailing operating income.

Welcome to the year 2026 in the global media technology sector, as there are implications from this level of asset pricing.

Let there be no confusion, this is the market clearing price. Harmonic publicly stated in October 2023 it was commencing a formal strategic review process for the Video Business and at that time had already “received interest from several external parties for our video business.” Harmonic did conclude the strategic review in April 2024 (6 months later), but the public process would have brought Harmonic into discussion with all serious buyers of the division. This was the best deal.

Don’t let considerations for the seller, color your exultations to the buyer.

The above is the standing team image available on the MediaKind website. Through a happy coincidence it is a reasonable facsimile for the team’s current, post-transaction enthusiasm.  MediaKind has been working on the deal for at least six months plus however much time was needed to structure and agree the deal ahead of its December 2025 announcement. Speaking as an analyst having met with the team since the Tandberg days, through the igloo-tradeshow-booth phase, and then to modern times, the vibes change is considerable.

MediaKind / Harmonic Video: Historical Context

We can’t help but add some historical context (you are welcome to skip ahead).

In the past twenty years, Harmonic completed five material acquisitions, contributing to its Video Division. The cumulative price paid was around $480 million. Adjusting those deal values into 2025 dollars yields slightly more than $700 million (to compare to the $145 million acquisition price).

Harmonic Video Acquisitions 2005 – 2025

Not included in the above, though mentioned for completeness, was Harmonic’s $1.4 billion (all stock) acquisition of DiviCom in May 2000. In an immediate twist, the assets were deemed impaired and all goodwill from the acquisition was written off seven months later in December (it was the best of times, it was the worst of times). Including such a transaction, during such a time, more than 25 years in the past feels gratuitous.

It makes the M&A investment more palatable to consider the operating income generated from the Video Division. Beginning in 2012, Harmonic began disclosing segment income for the Video Division. For the fourteen years from 2012 to 2025, cumulative segment operating income was a little more than $200 million ($250 million in 2025 dollars).

While the ledger doesn’t balance, it is still success when defined as maximizing value in the context of your circumstances. Harmonic (and also MediaKind) were running up a down escalator when it came to selling into PayTV operators and managing inexorable pricing declines with compression solutions – part moving to software, part commoditization.

As early as 2018, at the Devoncroft Executive Summit, youthful Devoncroft analysts openly questioned whether aggregate spend on compression product categories would ever grow again. We were fortunate to have (then) Harmonic CEO Patrick Harshman respond to the supposition (see below).

The financial impact of market developments is best observed in the financial results of Harmonic Video and MediaKind over the past decade. There was a trend.

When Harmonic announced its acquisition of Thomson Video Networks in December 2015. The pro forma annual revenue for its Video Division was just over $400 million dollars. Ten years later, annual revenue (as noted above) was a bit over $200 million (cut in half). The combined 2017 revenue of Harmonic Video and MediaKind was almost $700 million.

MediaKind’s journey to its next chapter was accomplished by crawling through glass. What is MediaKind was originally assembled by Ericsson through a series of acquisitions: Tandberg Television (2007), HYCGroup (2007), Aspex (2012), Microsoft Mediaroom (2013), Fabrix (2014), Azuki Systems (2014), and Envivio (2015). The cumulative spend for those acquisitions was in excess of $3 billion.

Having assembled the Media Solutions business, Ericsson then set to divesting it – and rather inelegantly. Ericsson announced its intention to explore strategic opportunities for its Media Solution division three weeks before the 2017 NAB Show, not a particularly helpful background to meet with customers.

The majority sale to private equity firm One Equity Partners was announced in late January 2018 and the transaction closed in late January 2019. Meaning, the business operated under the pale of an ownership transition for the better part of two years.

In interviews during the initial separation (2018 timeframe), MediaKind management added emphasis about the more than $3 billion dollars of capital spent assembling the business. That may have been the historical acquisition costs of the assets, but it wasn’t the current value of the assets.

Full year 2017 revenue for MediaKind was $380 million (and declining). Products like middleware and compression had no realistic expectation of growth. Operating losses for the Media Solutions business were breathtaking, as the operating margin for the 2018 year was -62%, which was a substantial improvement from the -278% registered in 2017. A 1,600-employee company with an expansive portfolio of products required a meaningful overhaul.

The January 2018 press release announcing the transaction with One Equity Partners took a long-term view. “We are confident that the direction we announce today will enable us to create the best long-term value, for both our customers and our shareholders” stated Ericsson CEO, Borje Ekholm. Long-term indeed, as Ericsson still holds a 45% equity position in MediaKind based on its latest regulatory filings.

The transaction pricing with One Equity Partners reflected the operating profile. Based on disclosures in Ericsson’s annual report, cash received from the divestiture (of 51% of the equity) was around $38 million (USD). $3 billion is a whole lot more than that price. Moreover, transaction costs from the divestiture process were more than $30 million and Ericsson was still responsible for funding a portion of operating losses. Disclosures in Ericsson’s filings indicate loans to MediaKind were made between 2019 – 2023 in the amount of $250 million.

Rebranding from Ericsson was necessary and added yet another obstacle. Product ownership, as recorded in the Big Broadcast Survey, dropped by more than half. Far more a reflection of the rebrand (Ericsson to MediaKind), as many customers didn’t appreciate they now owned MediaKind products.

MediaKind’s Transformation

For all the opprobrium heaped on private equity, MediaKind’s transformation could not have happened in the public markets. Allen Broome, when appointed in late 2021, was the third CEO of MediaKind in its then four-year history. Lots of difficult decisions were made. The product portfolio was rationalized, self-service options (MK.IO) were launched, there was a go-to-market shift toward partners (especially with cloud providers), and the messaging radically simplified.

Source: Discover MK.IO (Chris Wilson), www.mediakind.com/mkio/

MediaKind’s portfolio went from more than 10 high-level products to three. SKUs dropped from around 1,000 to less than 100. In an interview with Devoncroft post-transaction, MediaKind’s CTO Cory Zachman offered background on the how and why. “We became more selective about the customer problems we solved, focusing on the areas where we could build a profitable, sustainable business – and we walked away from uneconomic deals.”

It is sage advice. All the more necessary in the current market environment. 

MediaKind: The New Combined Business

The press release announcing the merger aggregates more than $250 million of revenue. That is a humble description. Harmonic Video’s 2025 revenue was $210 million. While MediaKind is smaller, it isn’t that much smaller. Meaning, annual revenue is substantially more than $250 million.

MediaKind is the going-forward brand, as new Harmonic (focused on virtualized broadband) is keeping its brand. Individual product brands for ProStream, Spectrum, XOS, and VOS persist as product brands in the MediaKind portfolio (already live on the MediaKind website).

There is direct overlap in both the SaaS and appliance products, whereas Spectrum (Playout) and MK.IO Platform (TV/Streaming Platform) are extensions to the combined portfolio.

According to the press announcing the deal, post-acquisition the business will a $100 million of annual recurring revenue, reflecting combined portfolios having substantially transition to software and services. Customer preferences for on-premises hardware remain an observed characteristic of global media technology buyers. Consider that Harmonic Video launched its VOS SaaS offering in 2016 and as of Q3 2025 SaaS revenue was still only slightly more than 30% of quarterly revenue.

The combined business should have immediate, material cost synergies from streamlining the go-to-market and support infrastructure focused on the same customer base. While there are two booths at the upcoming IBC Show, they are across the aisle, with a single brand, and a common demonstration area – because there is a plan, reflecting planning having been underway for some time. We do confess an interest in tracking how overlapping products converge over time and the ultimate go-to-market equilibrium (Harmonic Video had a more pronounced direct sales focus and no self-service option).

Whatever baggage of the past existed is now discarded. The current investment basis reflects the carve-out from Ericsson and the carve-out from Harmonic, not the historical prices paid for acquisitions nor the historical levels of revenue. It is a remarkable resetting of expectations; all accomplished with industry veterans. All members of the executive management team have been in their current capacity with MediaKind or Harmonic Video for at least 5 years.

Don’t want to suggest integration and product strategy is easy. Rather the starting point from here is much easier than the lift was to get here.

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