Harris Corp. getting out of digital signage/DOOH

Tech giant Harris Corp. recently announced its decision to divest itself of its Broadcast Communications division, which includes its digital signage business, but a company spokesman insists the division is continuing "business as usual."

Harris is perhaps best known within the digital signage space for its InfoCaster suite of digital signage products and its 10-year digital out-of-home network deal with 7-Eleven, but the company is perhaps better known outside of the sector as a multibillion dollar communications company specializing in government, defense and commercial contracts.

According to a May 1 Harris announcement, after the close of this quarter, the company has approved the plan to drop Broadcast Communications. "As a result, current and prior period financial results for Broadcast Communications will be reported as discontinued operations beginning with the fourth quarter of fiscal 2012," the announcement said.

"The decision to divest Broadcast Communications resulted from a thorough review of our business portfolio, which determined that the business is no longer aligned with the company's long-term strategy," said Harris Corp. President and CEO William Brown, in the announcement. "The plan to sell these assets supports our disciplined approach to capital allocation, and we intend to use the proceeds to return cash to shareholders and invest in growing our core businesses."

The company also is "exiting the Cyber Integrated Solutions business and selling the underutilized facility in Virginia," Brown said.

The same day, Broadcast Communications Division President Harris Morris sent out a letter saying that he fully supports the move and believes "that the timing is right for both Harris and Broadcast Communications." Morris also said Broadcast Communications was "less aligned" with Harris' long term strategy.

"Operating independently or as part of a broadcast or media-focused enterprise will provide us with strategic investment, increased competitive flexibility, and customer focus to lead the continuing transformation in this competitive marketplace," Morris said. "The decision to divest in no way reflects the quality of the work Broadcast Communications performed in support of our customers and our company. Harris simply determined that Broadcast Communications could provide higher value and operate more effectively under a different ownership model."

For now, he said, the division will continue to be a part of Harris Corp. and operate "business as usual."

"Business as usual" also was the phrase used by division PR representative Brian Galante in a recent telephone call.

"Things are continuing as normal," Galante said. "Harris Corp. did decide to divest the broadcast business, but is still supporting us until a buyer is named ... Up until that point, business as usual continues; no one has lost their job; the current structure continues as is; and we're moving forward."

There has yet to be any indication who might be among the potential buyers of the division, and Galante doesn't expect any announcements along those lines until the beginning of Harris' fiscal year 2013, he said.

Looking at Harris Corp.'s overall portfolio, which is heavily dominated by government and defense contracts, the broadcast and digital signage businesses really don't have a clear fit, so the decision does make logical sense, Galante said, adding that the broadcast business was "a labor of love" for Harris Corp.'s previous CEO.

"Still, there are a lot of positive things happening here, and I think in the long run it's going to make sense for both Harris Corp. and us, assuming we land somewhere comfortable," he said. "There is a big sense of optimism across the broadcast division, and that includes digital signage."

Across the digital signage industry, the news met with mixed reactions, among them the view that the divestiture is just symptomatic of the larger, and necessary, trend of consolidation in the digital signage marketplace.

"The digital signage market is very fragmented, with many companies trying to serve the market. Many of these companies are losing money and/or struggling to gain market share," said BrightSign CEO Jeff Hastings. "I think Harris exiting the market is just the latest example of the consolidation that is happening and will continue to happen as companies find their place in the market."

Longtime digital signage consultant and industry observer Lyle Bunn said the digital signage and digital out-of-home parts of the broadcast division should make it more attractive to a buyer or to investors, "or could enable considerably more capability in enterprise media to be added to the digital media group of an existing provider."

"Harris Morris ... has been the designer and champion of OOH group direction," Bunn said. "He has a clear view of the value that this media brings to the 'paid-owned-earned' media models that are important to marketing and communications organizations, and how dynamic place-based media can drive consumer engagement and brand success. The insights he will bring to possible buyer/investor discussions will serve interested parties well."

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