With Motorola‘s announcement that it will buy Terayon for approx $140mln in cash, Moto hopes to bolster its end-to-end strategy and keep competitors at bay. Terayon’s tech, including its well-regarded "CherryPicker" line of digital video processing wares, gives Motorola a much-needed foothold, as Terayon has already deployed some 7800 CherryPickers and related equipment. Motorola’s move on Terayon may be not a moment too soon. Earlier this year, Ericsson won a heated bidding war against Arris to buy Tandberg TV (Cfax, 2/27) as the Swedish firm moves to put itself on more even footing with Motorola and Cisco in the cable space (Ericsson just got regulatory approval Mon). Cisco has been on a cable-vendor buying binge of its own over the last 2 years, most notably with its acquisition of Scientific-Atlanta. Cable operators are actually driving much of the vendor consolidation. "The ability to personalize content delivery is becoming increasingly important to service providers, and this acquisition may give Motorola capabilities that heretofore were not in their product portfolio," said BusinessEdge Solutions’ Bruno Codispoti. Many MSOs see dynamic ad insertion as vital to the success of VOD, and "the ability to brand this content and target ads for this content in a better way has been a challenge for cable operators," says Barbara Bickham, pres of L.A.-based TechGenii, which advises on new media and interactive strategies. "With the acquisition of Terayon, [Motorola’s] set-top box now also becomes an advertising engine." And by filling that gap in its portfolio, Motorola also "builds upon its competitive offering against Cisco," said Jefferies & Co. in a client note. Terayon’s overall expertise in digital ad insertion, regional/local channel branding and video processing at the network’s "edge" are among assets Motorola could exploit, Jefferies said. Dan Moloney, pres, Motorola Connected Home Solutions, said the deal should help Motorola serve operators "looking for a digital video core that will maximize bandwidth and enable the delivery of revenue-generating services." Terayon’s assets would become part of Moloney’s division if the deal goes through as expected in the 2nd or 3rd quarter of 2007.

The Daily



Stephen Potenza joined Fox Corp as Deputy General Counsel, Fox News Media . He last served as a partner in Kirkland & Ellis LLP ’s Litigation and Government, Regulatory and Internal Investigation groups

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