The Leitch Legacy

The Leitch Legacy; Five Companies Filling the Void.

Five years ago this month, October 25th, 2005 to be precise, Canadians lost the head office of one of our most promising companies. Toronto’s Leitch Technology (TSX:LTV), was a worldwide leader in a host of broadcast technologies. The Company’s Viewguard encryption system, for instance, was used worldwide. US giant Harris Corporation (NYSE: HRS) recognized this leadership position, acquiring Leitch for (US)$450 million. It was one of sixteen acquisitions Harris made that decade. Some see the departure of Canadian companies through acquisition as a good thing, some as bad. If you are part of the latter group, you will be pleased to know the Leitch/Harris cloud has a silver lining. In the time since Leitch was acquired, some publicly listed Canadian techs, some founded or run by ex-Leitch employees, have admirably filled the void, establishing worldwide leadership in various broadcast technology niches.

You may know one, two, or all of the names of these continuously innovating broadcast technology leaders, but you may be surprised by the degree that they have helped each other innovate. Whether it’s Sensio (TSXV:SIO) and International Datacasting (TSX:IDC) teaming up to deliver a 3D broadcast of the World Cup Final, or Gennum and Evertz, whose offices are mere blocks apart. Collectively these companies now generate annual revenues of more than half a billion dollars. What may be more impressive is the real impact they are making on the international stage, having partnered with the giants such as BBC, CNN, Time Warner, CNN, CBC, ABC, and FOX.

Let’s take a look at five of Canada’s broadcast technology leaders:

1. Miranda (TSX:MT)

2009 Revenue: $131.75 million
Price, September 20th, 2010: $4.89
Price, September 21st, 2009: $6
Notable Leitch Alumni: Strath Goodship, President and CEO, Michael Proulx, CTO

You’re a reporter on the front in Afghanistan with a just a Digital SLR, or run a local cable access show that is chasing down a story that happens to have national appeal. Or you’re a producer with amazing footage of that car crash -that was filmed on an iPhone. Broadcasters everywhere receive thousands of signals every day, but these signals are not always in the same format. Montreal’s Miranda converts them into a single homogeneous HD signal standard. Miranda’s solutions also continue through to the software stage, where broadcasters process the feed prior to airing. Ever watch your favorite sitcom and see the star of another show pop up in the corner pointing to his program’s logo? That’s Miranda. Earlier this year, Miranda partnered with Sensio to develop a suite of broadcast products that allow stereoscopic 3D playout. These products will use Sensio’s Densite 3DX-3901 technology to convert 3D formats over an existing 2D structure. Miranda’s President and Chief Executive Officer Strath Goodship cut his teeth at Leitch Corporation, where he was Director of Engineering from 1986 to 1990, and Michel Proulx, Miranda’s Chief Technology Officer, worked at Leitch Technology from 1987 to 1997.

2. Gennum (TSX:GND)

2009 Revenue: $85.24 million
Price, September 20th, 2010: $6.90
Price, September 21st, 2009: $4.3

Founded in 1973 as Linear Technology, with an office mere blocks from Evertz Technology’s Burlington headquarters, Gennum is the back end that makes 3D TV happen. The company’s history is in semiconductor products for the video broadcast industry. Through acquisition and in house innovation Gennum has kept an aggressive stance with products that have kept it at the bleeding edge of broadcast technology. Many of Gennum’s products and services are complex, but the company’s mission boils down to making sure that the myriad of data communications it enables do not lose signal integrity.

At the recent International Broadcasting Convention show in Amsterdam, Gennum released the GX3290, part of a 3G family of non-blocking crosspoint switches that target the increasingly complex demands of video routers, video production switchers and multiviewers. Gennum demonstrated this switch using and Sensio’s 3D encoding and decoding technology.

3. Evertz (TSX:ET)

2009 Revenue: $286.45 million
Price, September 20th, 2010: $16.65
Price, September 21st, 2009: $14.20
Notable Leitch Alumni: Romolo Margarelli, President and CEO, Doug DeBruin, Executive Chairman, Rakesh Patel, CTO, , Christopher Colclough; Director.

Yo Adrian! Thank God for these routing switchers, multi-image display processers and signal distribution amps from Evertz Technologies of Burlington, Ontario!Evertz, whose name derives from its founder, Dieter Evertz, is just down the road from Gennum. Evertz founded the eponymous company in 1966, before selling to a group that included current bosses Romolo Margarelli and Doug DeBruin, who came over from Leitch Technologies. The Company went public in 2006, raising $67 million in a TSX IPO. Like Gennum, Evertz is a broadcasting infrastructure company. The Company product line includes timecode equipment, closed captioning technology and multiviewers. Evertz’s products have been used in the production of Star Wars III, Rocky 6, CSI, Oprah and the 2008 Olympics.

4. Sensio (TSXV:SIO)

2009 Revenue: $524,744,
Price, September 20th, 2010: $1.54
Price, September 21st, 2009: $1.80

Sensio is the most vertical of all the companies covered here, concentrating exclusively on 3D. The Company’s flagship product, Sensio 3D allows for distribution of 3D content through traditional 2D broadcast networks. With the possible exception of DragonWave (TSX:DWI), Sensio was the market darling of 2009. After closing 2008 with a stock that went for little more than a dime, Sensio closed the following year at $3.18. The story behind the rise? Late in the summer of 2009 the company received a US patent for its 3-D technology. The patent was very wide-ranging, giving Sensio “…exclusive operating rights over its whole method of compression, decompression, formatting and playback of stereoscopic content for various 2-D and 3-D screens, and applies to the markets for home theatre, professional movie theatres, personal computing and mobile telephony”. Sensio then went on to make deals, signing agreements with ViewSonic, THX and a recent deal with Cinedigm to broadcast the 2010 FIFA World Cup final in 3-D in Cinedigm theatres. Miranda, Gennum and International Datacasting have all partnered with Sensio.

5. International Datacasting (TSX:IDC):

2010 Revenue: $23.32 million
Price, September 20th, 2010: $.29
Price, September 21st, 2009: $.24
Notable Leitch Alumni: Fred Godard, President and CEO of IDC served as President and Chief Operating Officer of Leitch Technology Corporation

Ottawa’s International Datacasting has a long history with satellites. The company began by delivering radio programs across huge networks by satellite.IDC was one of the pioneers at delivering Internet Protocol signals, the communications protocol used for relaying packets of information across the network that supports the internet, by satellite. International Datacasting helped upgrade the network of the National Public radio and supported the delivery of Thomson Reuters financial information. Canadians who downloaded the Netflix app to their Playstation this past month, listened to a radio station on their iPad or checked their savings account balance on their BlackBerry, are aware that more data is being pushed to more devices in more formats and in more places than ever before. Adam Adamou, IDC’s Executive Chairman says that IDC’s goal is to be “…a platform agnostic provider of equipment, technologies and standards that are evolving now or that emerge in the future.” Click here for our full interview with Adamou and IDC President and CEO Fred Godard.