The world of in-flight connectivity and entertainment is undergoing a bit of a growth phase as service providers and IFEC vendors improve and consolidate their focus on more entertainment and more planes, and in some cases, more markets. Last year the acquisition of ITC Global (maritime, mining, and energy markets) by Panasonic was the lead-in to today’s recent announcement of a purchase. Now, GEE, an airline content and satcom hardware service provider (over 200 airline customers), announced the acquisition of a $550-million, broad-based content and service provider, Emerging Markets Communication (EMC). EMC is primarily a maritime service provider that has high penetration in that market as well as Cruise ships (158,000 cabins), yachts (7,500 boats), commercial shipping/O&G (130,000 ships), UN & NGO, as well as, telco solutions. We note here that the consolidation of these mobility markets, and the desire to operate across wider and more diverse service segments, shows a collaboration trend in the satcom connectivity market and it underlies the increase in demand for connectivity and entertainment services by people, places and businesses everywhere. As they note, the deal “leverages complimentary products, technologies, and service offerings across air, sea, and land verticals to drive growth!”

Of course, we are really talking about three items here – Content, Connectivity and Mission Critical Service solutions. From a growth point of view, by 2021 the market will be worth some $5.4 B and one source noted to us that “…the key players in the market follow the strategy of acquisition and mergers and are focused towards entering into strategic partnerships with regional players in order to strengthen their position in the market.” It makes sense.

Specifically, in our story GEE is in the middle of this growth segment and is expanding their market now with a maritime focus in the acquisition of EMC, who has a strong market position there. From a global point of view, the acquisition of EMC provides GEE with complete worldwide connectivity that is supported by GEE’s existing Ku coverage as well as that of EMC. In addition, there is some C-Band coverage by EMC in the deal, resulting in an impressive chart.

The folks at GEE have acquired nine companies since its formation some three years ago. This acquisition is by far their biggest to date and will allow GEE to gain a foothold in the maritime market where growth will no doubt be exhibited.

IFExpress asked a few questions of Kevin Trosian, SVP Development & IR, and he told IFExpress:

1. Since you have purchased a “connected” company, does GEE see selling their content to the 8 EMC existing markets (Yachts, Energy, Cruise & Ferries, commercial shipping, mobile networks, government, UN, NGO’s and Global Enterprise)?

Yes, we believe there is a large opportunity for live and streaming content in the maritime and mobility verticals, and GEE’s digital media team has already worked with EMC for many years to jointly provide content to the maritime market. We see this a great opportunity for us to use our strong relationships with studios around the world to expand distribution into these markets.

GEE had previously provided TV and VOD products to EMC, including a number of live television channels, so this is not a new market for us. We have already obtained maritime rights from certain studios and/or distributors and are in the process of acquiring more. Ultimately we believe our combined knowledge of the market and relationships will enable us to leverage our strength in content for the maritime market for further growth of our media platform.

2. Can you tell us how big the existing market is?

The maritime and land-based connectivity and media markets in which we now compete are a multi-billion dollar opportunity. There is an available market of approximately 158,000 cruise cabins, 7,500 yachts and 130,000 ships.

3. Today, what countries have the 20 or so ground stations mentioned by EMC? Does EMC own them?
For this question, please see our Worldwide Infrastructure chart. In addition, through the acquisition we now have operations at 3 teleport facilities, including New Jersey, Hawaii and Germany.

4. This purchase looks like a prefect fit for GEE to grow and provide entertainment to the existing EMC service sections, can someone at GEE comment on that issue?

Please see 1 above.

5. Obviously the market is one reason GEE bought them; however, is there more to the story than that?

Yes, we believe there is a significant number of synergies that can be realized with the integration of the two companies. Through the integration, the company expects to realize synergies of $15 million in 2017, growing to $40 million in 2018 and thereafter. Synergies will primarily result from network efficiencies, including the ability to optimize bandwidth costs through a consolidation of existing network assets, including space segment and ground infrastructure, as well as, better capacity utilization.

6. From a company integration point of view, will EMC function pretty much as they do today? Will their information portfolio be enlarged by GEE’s entertainment content?

Yes, EMC will function in a fairly similar manner, but we will be integrating the companies into a single platform. The EMC team built a great foundation in an adjacent market to GEE’s traditional aviation market. We’re looking to leverage what they have accomplished and continue to build on that, such as by providing more media to the maritime market.

7. We gather that GEE has been looking for more markets for their content, why did they not just provide the content to companies like EMC and not go the distance to purchase one? What is the driving reason here?

There were multiple reasons for the acquisition, and the ability to sell content was only one of them.  We see significant opportunities within the connectivity businesses of both companies, including the ability to improve satellite capacity utilization. Further, by expanding into new markets, we believe our scale will improve efficiencies and the overall customer experience.

8. Will the EMC management and operations function pretty much as they do today or will there be management changes and new ways of doing business?

We’ve announced the new verticals (see below from the Press Release) and the Business Unit leaders.

• Dave Davis will continue to lead GEE as CEO.
• Abel Avellan, founder and CEO of EMC, will serve as President and Chief Strategy Officer of GEE.
• As part of the transaction, ABRY Partners, EMC’s largest shareholder, has a right to nominate a director to GEE’s board.

In conjunction with the transaction close, GEE has established three operational business units.

• The Media Business Unit delivers films and television shows, live TV, music, games and other content to aviation and maritime customers, including approximately 6,500 aircraft and many cruise ships currently served by GEE. Other products include digital and streaming media offerings such as the Airtime Content-to-Go application and the Entice streaming media system. Wale Adepoju will lead the Media Business Unit as Executive Vice President of Media. Previously, Wale served as Chief Commercial Officer of GEE.
• The Aviation Business Unit serves commercial airlines and private aviation using GEE’s proprietary Airconnect GlobalTM connectivity platform, which is currently installed on nearly 750 aircraft worldwide. The Business Unit also provides Navaero electronic flight bag (EFB) data interfaces and powered mounting systems, which are in place on nearly 4,000 aircraft today, as well as masFlight operational data analytics services. Joshua Marks, who previously led GEE’s Operations Solutions team, will lead the Aviation Business Unit as Executive Vice President of Aviation.
• The Maritime and Land Business Unit delivers connectivity and mission critical services to cruise and ferry lines, yachts, commercial shippers and land-based users such as non-governmental organizations and mobile network operators. Through this transaction, GEE has acquired a strong maritime customer base, serving over 1,500 vessels and 100,000 cruise ship cabins. In addition to overseeing certain corporate functions at GEE, Abel Avellan will lead the Maritime and Land Business Unit.

9. What does GEE bring to the party besides entertainment content? Will their airline solutions effect EMC’s products/solutions differently or much the same? If differently, how so?

GEE delivers worldwide connectivity to the aviation market and is the largest content and media provider for the broader mobility market. GEE brings an unparalleled portfolio of products and services tailored to mobility markets, including global connectivity, media content in 47 languages, live television, travel and entertainment apps, user interface platforms and data capture and operations analytics tools. We will also be bringing some of EMC’s proprietary and patented technologies, such as Speednet, to the aviation market.

• Combined, we bring:
  A global sales force and support organization that reaches all major mobility verticals including aviation, maritime energy and remote locations;
• A satellite and ground-based network infrastructure that can provide customers connectivity and media across multiple frequency bands anywhere in the world;
• Proprietary, patented technologies that enhance the connected traveler’s user experience and reduce costs across market verticals;
• A diversified revenue base with over 400 customers, balanced between media and connectivity with over half of all revenue coming from international markets; and
• Engineering, technical and managerial resources to effectively drive new product development, program management, product maintenance and field support.

10. How big is EMC and is there a new structure to come?

We haven’t discussed management structure beyond the senior leaders, which can be found in the press release (attached). EMC had approximately 450 employees located worldwide.

Note: Finally, IFExpress talked with many people about the acquisition and there was a great difference of opinion on on the subject and other issues as well. All we can say is keep your eye on a few factors that may (or may not) affect the future of GEE: Southwest Airlines, Ku/Ka Band airline preferences, Universal lawsuit results, marine market entertainment take-up, traveler personal device and entertainment demand. Stay Tuned.

GEE EMC Transaction Presentation

Lastly, we would like to thank Jenelle Benoit of GEE for all the assistance bringing this story to press!

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OTHER NEWS:

Rockwell Collins today announced that China Eastern Airlines selected its Iridium® SATCOM aftermarket solution for its fleet of more than 100 Boeing 737 aircraft. Installations are currently in progress. The voice and data communications solution, installed via a Boeing service bulletin for Next-Generation Boeing 737s, will enable reliable long-range global voice communications, flight tracking and Aircraft Communications Addressing and Reporting System (ACARS). The solution is also capable of enabling Future Airspace Navigation System (FANS) for airlines that need it for their operations.

• Forms Leading Provider of Satellite-Based Connectivity and Media to Global Mobility Markets
• Leverages Complementary Products, Technologies and Service Offerings Across Air, Sea and Land Verticals to Drive Growth
• Annual Synergies Expected to Exceed $40 Million

Los Angeles, CA | July 27, 2016– Global Eagle Entertainment Inc. (NASDAQ: ENT) (“GEE”) today announced that it has completed its previously announced acquisition of Emerging Markets Communications (“EMC”), a leading communications services provider to maritime and hard-to- reach land markets.

Combination Overview
The combination of GEE and EMC creates one of the world’s largest providers of satellite-based connectivity and media to the rapidly growing global mobility market. GEE has established a strong track record of successfully delivering media content and connectivity to airlines, while EMC has become a top provider of connectivity to maritime and hard-to-reach land markets. When combined with EMC, GEE benefits from significant economies of scale and an enhanced global infrastructure that enables it to deliver a comprehensive portfolio of products to customers.

With the combination, GEE possesses unique attributes that will provide additional opportunities to drive revenue growth and operational efficiencies, including:

• An unparalleled portfolio of products and services tailored to mobility markets, including global connectivity, media content in 47 languages, live television, travel and entertainment apps, user interface platforms and data capture and operations analytics tools;
• A global sales force and support organization that reaches all major mobility verticals including aviation, maritime, energy and remote locations;
• A satellite and ground-based network infrastructure that can provide customers connectivity and media across multiple frequency bands anywhere in the world;
• Proprietary, patented technologies that enhance the connected traveler’s user experience and reduce costs across market verticals;
• A diversified revenue base with over 400 customers, balanced between media and connectivity, and over half of all revenue coming from international markets; and
• Engineering, technical and managerial resources to effectively drive new product development, program management, product maintenance, and field support.

“This is a transformational acquisition for our company and in our industry,” said GEE Chief Executive Officer Dave Davis. “The combination of GEE and EMC enables us to provide our customers with a breadth of products and services unmatched in the markets we serve, whether in the air, at sea, or on land. GEE will continue to strive to be customer focused, product driven, and operationally excellent.”

Synergy Opportunities
GEE has a successful track record of integrating acquisitions and achieving synergies. With EMC, the Company expects to realize synergies of $15 million in 2017, growing to $40 million in 2018 and thereafter. A major source of savings is expected to come from network efficiencies, including the ability to optimize bandwidth costs through a consolidation of existing network assets, including space segment and ground infrastructure, as well as better capacity utilization. Savings are also expected through reductions in SG&A spending and the consolidation of facilities.

In addition to cost savings, GEE expects the combination to generate significant revenue synergies. Driving sales of GEE’s media, software, advertising and operations solutions products in the underserved maritime market are a key objective of the Company. GEE’s digital media team has had a long-term relationship with EMC and expects to launch new products to major cruise lines before year-end. EMC’s proprietary technologies are in use today to improve the connectivity experience and optimize bandwidth usage in the maritime market. GEE will soon introduce these technologies into the aviation market.

Corporate Structure
Dave Davis will continue to lead GEE as CEO. Abel Avellan, founder and CEO of EMC, will serve as President and Chief Strategy Officer of GEE. As part of the transaction, ABRY Partners, EMC’s largest shareholder, has a right to nominate a director to GEE’s board.

In conjunction with the transaction close, GEE has established three operational business units.

• The Media Business Unit delivers films and television shows, live TV, music, games and other content to aviation and maritime customers, including approximately 6,500 aircraft and many cruise ships currently served by GEE. Other products include digital and streaming media offerings such as the Airtime Content-to-Go application and the Entice streaming media system. Wale Adepoju will lead the Media Business Unit as Executive Vice President of Media. Previously, Wale served as Chief Commercial Officer of GEE.
• The Aviation Business Unit serves commercial airlines and private aviation using GEE’s proprietary Airconnect GlobalTM connectivity platform, which is currently installed on nearly 750 aircraft worldwide. The Business Unit also provides Navaero electronic flight bag (EFB) data interfaces and powered mounting systems, which are in place on nearly 4,000 aircraft today, as well as Masflight operational data analytics services. Joshua Marks, who previously led GEE’s Operations Solutions team, will lead the Aviation Business Unit as Executive Vice President of Aviation.
• The Maritime and Land Business Unit delivers connectivity and mission critical services to cruise and ferry lines, yachts, commercial shippers and land-based users such as non- governmental organizations and mobile network operators. Through this transaction, GEE has acquired a strong maritime customer base, serving over 1,500 vessels and 100,000 cruise ship cabins. In addition to overseeing certain corporate functions at GEE, Abel Avellan will lead the Maritime and Land Business Unit.

 

• Transaction valued at $550 Million
• Creates a leading provider of satellite-based communications and media content to rapidly growing mobility markets
• Combined company expected to generate pro forma revenue of $660-690 million in 2016
• Annual synergies expected to reach $40 million

Los Angeles, CA | May 9, 2016– Global Eagle Entertainment Inc. (NASDAQ: ENT) (“GEE”) today announced that it has signed a definitive agreement to acquire Emerging Markets Communications (“EMC”), a leading communications services provider to maritime and other mobility markets. The combined company will become a leading provider of global satellite- based communications and media content serving the rapidly growing aviation and maritime markets and select land-based markets. For additional details, please visit GEE’s transaction microsite at GEE-EMC.mobi.

Under the agreement, GEE will pay $550 million for EMC. EMC shareholders will receive $30 million in cash and 6.6 million shares of GEE stock at closing and another $25 million in 2017, which may be paid in cash or stock at GEE’s election. As a result of this transaction, ABRY Partners (“ABRY”), an experienced communications-focused private equity investment firm and the majority owner of EMC, will acquire an equity position in GEE as well as the right to nominate a member to GEE’s Board of Directors. Dave Davis, Chief Executive Officer of GEE, will be CEO of the combined company and Abel Avellan, Founder and Chief Executive Officer of EMC, is expected to serve as GEE’s President and Chief Strategy Officer.
The combined company is expected to benefit from:

• An expanded addressable market and growth opportunities;
• Unparalleled global infrastructure to support customer needs;
• A diversified and balanced revenue mix; and
• Significant network and operational efficiencies.

“This is a transformative acquisition for GEE that significantly expands our addressable market and accelerates our growth opportunities,” said Davis. “EMC’s verticals collectively represent a multi-billion dollar market opportunity with most growing at an annual rate of approximately 15%. Moving into a highly complementary, adjacent market like maritime leverages our existing infrastructure and suppliers to achieve improved efficiencies and cost savings, and provides valuable cross-selling opportunities for our content, digital media and operations solutions