SVG Europe recently sat down with Presteigne Broadcast Hire CEO Mike Ransome for a frank and wide-ranging conversation about the broadcast equipment rental business. Presteigne has been through plenty of twists and turns during its 23 years in the market - everyone knows about the acquisition of Charter Broadcasting in 2008 and the subsequent decision to close it earlier this year - and this provided an opportunity to talk about how the business works; the value of ongoing relationships; and the critical role of new technologies such as IP mesh and 4K that ultimately keeps a rental house on top of the game.
Mike we actually know each other from way back before Presteigne ever existed, when you were working for AVS Broadcast in the Eighties. AVS was a standalone standards converter manufacturing company then, if I recall: where did that technology come from?
Yes AVS Broadcast (where the Avesco brand comes from) was the first company. I had seven fabulous years there, as sales director. The two guys who designed the first 8-bit standards converter, John and Trevor, came from the print industry, computerised print. They were very clued-up engineers, and of course print was probably the first industry to move into digital technology ahead of everyone else.
They designed the converter, around which [Avesco Chairman] Richard Murray thought there was a future. He funded it and asked me to run the sales side, which I did for seven years. But in the end you could see that Avesco were not into manufacturing - it was going to be more about services as the group grew. In 1985 the group went public, to raise funds for R&D etc, so AVS Broadcast became isolated and I then left. I went to run the sales operation at Basys newsroom systems for two years.
After that, I was actually helping to run a company that rented test equipment, and they were in some trouble. It was going to go bust - it did go bust and went into receivership. The receiver just phoned me one day and asked could I help him, as he knew nothing about the equipment. So I went back, helped him, and in the end raised the money and bought the stock. And that's how this business started as Presteigne. I needed a company name quickly and Presteigne was the only one available - and it stuck!
This was the early 90s and recession time, and I had a young family. It was a tough time; banks wanted you to sign your life away and give your house up and so on for a £10k overdraft. Then Richard Murray phone me one night - I'll never forget it - and said would you be interested in selling the company and then coming back in to run it, as we need a rental company in the group? It really just blossomed from there. We built it up.
And here we are 20 years later. Let's talk about where your business is now. What happened with Charter Broadcasting? Is Presteigne still in the OB business, or the project systems business - or have you gone back to your roots in equipment rental?
As a dry hire, RF audio and broadcast video business, we're very successful and doing well. The one area we didn't operate in was the large-scale projects business. We did all the fly-aways, and we still do. An opportunity to acquire Charter Broadcast came up, and through Avesco we made the acquisition. We perhaps made that acquisition without knowing totally how that business operated. That was in 2008.
The sheer amount of investment you have to keep putting into that business for returns every two years [what Ransome describes as odd years and even years']. And of course you're still carrying depreciation and the cost of purchase.
Even though we're part of a public group our bankers are Avesco, and we go to them for money. We tried to make that side of the business work. It's quite people-intensive. You also tend to find when you come around to say an Olympic Games you might be sitting here with a big 528 528 matrix which is more than capable of doing the job - but the customer doesn't want this one, he wants that one. Then you end up buying that one and wondering, how am I going to make it work next year?'
After five years we thought, this is just no good, it's dragging the whole business down. We looked at all our overseas offices (which had come with the acquisition) and could see it was a business very much geared around projects, larger projects. So we just said No, we've got to think about the long-term future of the business.
We decided [earlier this year] to close Charter and it fell to me to do it - and I got on with it basically, although very difficult times because as you know this industry is full of gossip. But you can't think of that; you have to plough on and put your business plan together and get your finance people to do the forecasts and projections. You've got to look at your stock and get rid of lines you no longer wish to carry.
In the meantime, with all that happening, we were talking to the BBC about Formula 1 - which is just up our street in terms of how it functions and the way it was to be built into special airline container systems and so on, it's a moving circus and a four-year contract. Financially it made sense and we invested. A lot of distribution internally is fibre optic, just to cut down on weight because the cost of shipping around the world is phenomenal. And actually that's what we're doing now: we're looking at designs in fly-aways and looking at all the new fibre technologies.
Let's say we get asked to do a motor racing job in Eastern Europe. Most of the time it would be the case that the shipping costs account for 40% of the job. So the actual charge for the equipment is fair, and you're going to get a return on it. But by the time you've added the shipping cost - the tendency is to take it off the equipment budget, which you really shoul
