When it comes to cable TV there are many companies that you may not know about but are very important to how cable TV works. One of these companies is Harmonic Inc a company that builds many of the important pieces of equipment that make cable TV work.
Today, Harmonic Inc announced its earnings and reported that revenue for its video unit was down 19.5% year-over-year. This comes as increasingly Harmonic revenues are coming from its broadband internet business, that makes up 60% of its revenues. This is a far cry from the days when video dominated their business.
Now the company has started a review of its video business as it looks at what to do with it. It is also looking at a potential sale of the video business.
“After careful consideration of the growth opportunities in both our Broadband business and Video SaaS business, and our capital allocation priorities over the next several years, we have initiated a formal strategic review process for our Video business. Together with financial and legal advisors, we are assessing a range of alternatives for the Video business to better position Harmonic for long-term shareholder value creation. As part of this process, we have received indications of interest in our Video business from a number of parties over the past several months. Since the strategic review may cause some disruption to the business, we are conservatively guiding our Video business for Q4 2023.” The company said in a press release.
The company went on to say during its earnings call that it already had several interested parties looking at buying its video business.
This is a huge red flag at the overall state of cable TV. One of the key players that makes the hardware for traditional cable TV is making it clear that this area is not profitable in the way it once was. On the flip side, their streaming business saw strong growth as it focuses more on equipment used to stream live sporting events. The streaming side saw a jump of 42% year-over-year in revenues. Sadly though, this growth could not offset the decline of its traditional cable TV business.
Increasingly as a growing number of cable TV companies move to streaming numbers from Harmonic gives us a good idea at the overall status of cable TV as an industry.