Grass Valley-Black Dragon Deal in Depth: Tim Shoulders and Louis Hernandez Jr. on What It Means for the Industry

Grass Valley-Black Dragon Deal in Depth: Tim Shoulders and Louis Hernandez Jr. on What It Means for the Industry The two executives foresee a software-based future for the broadcast-tech company By Jason Dachman, Chief Editor

Tuesday, February 4, 2020 - 2:31 pm

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Earlier today, when news broke that Belden will be selling its Grass Valley business to Black Dragon Capital, many in the broadcast industry breathed a sigh of relief. After Belden announced plans to divest Grass Valley in October, the broadcast-technology giant - and its customers - found itself in a state of limbo as the company pursued a new private-ownership structure. However, with the Black Dragon deal in place, the private-equity fund's founder/CEO Louis Hernandez Jr. and Grass Valley President Tim Shoulders are projecting a bright future.

Following the announcement, SVG spoke at length with Hernandez, former CEO of Avid and a broadcast-industry veteran, and Shoulders, who will continue in his role. The two painted a picture of a company that will be less concerned with short-term financial needs that drive the stock of a publicly owned company like Belden and far more focused on building value into the business over the long term.

In addition, both Hernandez and Shoulders say the deal will accelerate the shift of Grass Valley's product portfolio to more-flexible software- and SaaS-based technologies in the near future. Hernandez also stresses that Black Dragon is in it for the long run and looks to bring stability to Grass Valley, which has seen three owners in the past decade.

Hernandez and Shoulders offer an inside look into how the deal got done, why it makes sense for both companies, what customers can expect in the near term, and what the acquisition means for the sports-broadcast sector and the M&E industry as a whole.

Tim Shoulders will remain as president of Grass Valley.

Why did this deal make sense for Grass Valley?

Shoulders: Being part of the Black Dragon Group will help Grass Valley accelerate our innovation, and we will have the ability to be more strategically focused on the long term. There will be a lot less concern about short-term financial needs driven by being part of a publicly owned company and a lot more focus on building value into the business over the long term. I think that is extremely positive.

And why did this acquisition make sense for Black Dragon Capital?

Hernandez: First, what makes Black Dragon unique is, we're all operators and all of us have run successful businesses in the sectors in which we invest, which is media and sports, banking, and e-commerce. And, in each of those areas, we create a thesis of what's happening with the digital disruption and which companies are best-positioned to lead. Based on our assessment, we believe Grass Valley is in an ideal position to help [customers] navigate this transition to pure digital workflows. Unlike a lot of companies who announce products [that] aren't ready for a long time, we were very pleasantly surprised with how advanced their technology was, so we couldn't be more excited.

Why do you see Black Dragon as the right ownership fit for Grass Valley moving forward?

Shoulders: I think Black Dragon makes an excellent owner for the Grass Valley business because they have expertise in digital transitions and that is exactly what the broadcast business is going through currently. In our strategic plan at Grass Valley, we had identified a real need to help the industry [transition] into more-flexible business models and dynamic workflows. Black Dragon has the expertise, having done that on several occasions, so we will be able to rely on their expertise in order to get to the end goal faster.

What does this deal mean specifically for the sports-production and -broadcast industry?

Shoulders: This transaction puts us in an improved position to invest in workflows that will help our sports clients deploy more-efficient productions, including REMI models or cloud-based-production models. In a relatively short period of time, we are going to be able to provide them with solutions that will revolutionize the way they create content. I think that's exciting. They'll be able to experiment with their own business models and their own revenue models in a way that's cost-effective. And we're uniquely positioned to unlock those abilities for them because of the breadth of our product set.

Black Dragon Capital's Louis Hernandez Jr. is optimistic about the future of the broadcast industry and Grass Valley's prospects.

Can you describe what the Black Dragon Playbook is and how you see its aiding Grass Valley in the future?

Hernandez: All the partners [at Black Dragon] have started businesses and turned them into billion-dollar businesses, as well as turned around very large companies that were in trouble. Through those experiences, we've learned and codified a way to create high-growth, financially viable software companies that are leading their industries. We've essentially codified that into three tools: the Black Dragon Leadership Index, which is how to identify and put together the best team for the phase of development the company's in; The Black Dragon Playbook, which is how to solve the industry's most critical problems and inspire the industry forward in an economically sustainable way; and The Black Dragon Way, which creates an accountable, winning culture where people love to work and you really make a difference in the community.

As it relates to Grass Valley, we feel we can use these tools to help the management advance the course that they're already on without being limited by being part of a public company that is focused on quarterly results. We are embracing an industry that we love to participate in and investing in for

LINK:	https://www.sportsvideo.org/2020/02/04/grass-valley-black-dragon-deal-...
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