Technicolor is a worldwide technology leader operating in the media and entertainment industry. Its activities are organised in two business segments, Entertainment Services (the combined Production and DVD Services businesses) and Connected Home.
Technicolor’s new CEO, Richard Moat, appointed in November 2019, has completed his review of the group. He has now set out his strategy to play to the group’s commercial strengths and put it on a firmer financial footing. More detail will be added at a capital markets day scheduled for 19 February. Cost savings of €150m have been identified (an additional €110m to those already being implemented, and at an implementation cost of €90m over three years) and an underwritten rights issue of €300m is envisaged. Key lenders will then extend the debt facilities, subject to the successful completion of the rights Issue.
Connected Home operates in a large (FY18: $16.4bn) but tough market, with little growth, thin margins and limited visibility. Scale is key, giving access to cheaper components and leveraging platform development costs. The DVD market continues to decline, although increased market share has allowed some offset. A broad customer spread in Production Services ensures a high base workload, bolstered by the appetite for high-end content from VoD platforms and growth in VFX-heavy movies. Studios increasingly outsource animation and the strength of the gaming market is driving enhanced user experiences.