Silverwood Partners - NAB 2012 - Strategic Industry Analysis

Investment Bankers
April 2012
Jonathan Hodson-Walker 508.651.2194 jhw@silverwoodpartners.com Joshua Stinehour 508.651.8134 jstinehour@silverwoodpartners.com
Strategic Industry Analysis Nick McCoy 508.651.2441
nmccoy@silverwoodpartners.com Brian Zapf 508.651.8135 bzapf@silverwoodpartners.com
32 Pleasant Street Sherborn, MA 01770 www.silverwoodpartners.com
Member FINRA and SIPC
Invitaon: Sunday Strategy Session
Click here for full agenda on NAB website

Copyright Silverwood Partners 2012
Page 1
Leading Media Technology Investment Bank

Selected Media Technology Engagements
Firm is highly active in media technology transaction flow Firm has worked with many leading media technology companies advising or
selling companies to some of the premier companies in the industry
Page 2
NAB 2012: Expected Talk of the Show

the board of directors determined that a more structured process should be put in place in order to enable the Corporaon to review further expressions of interest and to hold discussions with potenal - March 21, 2012 strategic partners. Miranda Press Release
Miranda Provides Update Regarding Board Acons
Harris Corporaon Reviewing Porolio

developing a strategy for this business [Broadcast division] that maximizes shareholder value. - January 31, 2012
(Sourced: Seeking Alpha)
.Our team is now laser-focused on
KIT Digital Implements Management and Board Changes
William Brown CEO, Earnings Call
The strategic transacon process, which is underway at the direcon of the board's Special Transacon Commiee, is at a pace that requires my [Chairman, Kaleil Tuzman] dedicated focus - March 23, 2012 KIT Press Release - Mar. 15, 2012 - Feb. 17, 2012
Cloud SaaS Mul-Plaorm MAM SociallTV Second Screen Channel-in-A-Box Market is Hot, Crowded
- Oct 13, 2011
Acquires
$5 Billion 5x Revenue 18x EBITDA
IPO
Raised $55 Million Currently trades at 10x Revenue
we have implemented the Ongoing Corporate Turnarounds restructuring we announced in October and expect to This divesture [Broadcast business] is an see addional benet from these acons in 2012. We important part of our strategy to transform SeaChange into a pure play soware company, signicantly reduce connue to idenfy and implement our overall cost structure, and strengthen our ability to changes across the Company to help improve compete our operaonal performance - SeaChange CEO Raghu Rau Avid CEO Gary Greeneld
Page 3
NAB 2012: Key Strategic Topics 1 2 3 4 5 6

Implicaons of End of Four-Year Purchase Cycle? Valuaon is a Funcon of Growth and Protability Where is the Growth? Impact of Accelerang Technology Change? Consolidaon Connues Summary
Page 4
2011: Strong Operang Results

Selected Vendor Performance: taken from most recent reporng period Last 12 months revenue growth (percentage)
Industry Index
5 0 9 0 31 14 6 34 0
Source: Thomson One, Company filings
3 2 21 3 64 59 2
(2H2011 vs. 2H2010)
69 9 4 47 30 24 51 102 27
41 16 12 19
Page 5
Relevant Business Unit Performance most recent operational period available
2010 2012: Growth Slowing

Most recent LTM performance available pre-NAB Relevant Business Unit Performance
NAB 10 NAB 11 NAB 12
Industry Index
18 20 26 25 8 22 14 13 4 31 21 5 8 8 32 30 24 84 9 45 5 9 0 14 6 34 0 69 9 4
3
12 24 120 1 16 8 0 13 15 40
Source: CapitalIQ, Thomson One, Company filings

(1) Integrated Network Solutions (includes Broadcast)
33 14 110 9 9 13 7 23 15 28
30 24 102 27 21 3 2 19 12
(1)
NAB 10 NAB 11 NAB 12

16 NAB 10 NAB 11 NAB 12

Page 6
2012 Acve Calendar of Events

London Summer Olympics, European Soccer Championship 40 Elecons = 40 incumbent governments spending money + 40 polical adversing campaigns
US Polical Adversing alone forecasted at $9.8 billion in 2012 Broadcast TV to get 57 cents of every $1 spent.
Source: Borrell Associates
Source: IEFE
Page 7
Timing Consideraons: Industry Cycle

Characte riscs of Each Phase
Peak Recovery In advance of quadrennial
events
We are here
During quadrennial events Nearing compleon of

technology cycle
Signs of distress in
Well-before compleon of
technology cycle
adversing market and broader economy alternaves proliferang
Downturn No near-term events Technology cycle mature Slowing general economy

adversely aecng adversing market alternaves in use models
Disrupve technology
Stable to growing underlying

economies (adversing market) alternaves
Few disrupve technology
Mulple technology Confusion on business
Page 8
Four Year Broadcast Purchase Cycle

Source: US BEA
2.7%
US GDP
3.5%
1.9%
3.0%
0.3%
1.7%
Significantly increased confidence Downward pressure on prices Confidence high Better than expected order volumes
Order volumes increasing, values improved Price competition increased markedly
exceeding expectations Selling prices resilient
Confidence falling Customer deferrals significant Pressure on prices
2006
2007
2008
2009
Source: IABM
2010
2011
2012
Page 9
IABM Market Sizing
Confidence at an all-time high Excerpts from IABM Industry Survey Better than expected order volumes Confidence high globally Industry is bristling with activity Confidence continues to grow Increase in orders
Modest confidence level Order levels as expected and stable Selling prices remain resilient
Transacon Acvity; Expect Announcements

Selected Transacons
Jun 10 Dec 10 Dec 10 Dec 08 Aug 09 Mar 11 Broadcast Service Mar12 Dec 11
XOR Media
Mar 12
Broadcast
Dec 08
Mar 09
Mar 10
Sep 10
Feb 11
Jan 12
(Silverwood Industry Observaon)
Transacon Acvity Level
2008
2009
2010
2011
2012
Page 10
IABM Market Sizing
May 10
What Happens in 2013?

Predicon is Dicult
We do not expect signicant spillovers from the subprime market to the rest of the economy or to the nancial system.
- Ben Bernanke May 2007
Over the immediate years [2009, 2010] ahead the [broadcast technology] market is forecast to grow at 11% compound per annum.
- IABM Industry Source Book, 2008
Highlighted Areas
Adjacent Use Cases of Technology Future Growth, Events in Emerging Countries
Percentage of Sales in Broadcast

Vendors with More than 50% Vendors with less than 50%
(Source: Silverwood)
Non-broadcast revenue to increase
2012 Forecasted GDP Growth by Country Source: IMF Page 11
What Happens in 2013 M&A Market?

Apr 07 Condence Level Economic Acvity Credit Market Equity Markets Apr 08 Apr 09 Apr 10 Apr 11 Apr 12 Apr 13
?
M&A Market Indicators Followed by Silverwood
Media Tech Industry Factors
Page 12
Aer 2013? Evolving Value Chain

Content Producon Content Packaging Content Distribuon
Is the Set-Top Duopoly on Its Deathbed?
Consumpon
Tablets Helping Improve News Consumpon
NFL accounts for 9 of TWC's Stern: TV Will Evolve 10 highest rated telecasts in 2011 (US) To 'Pandora-Like' Mode
Source: Nielsen
The New York Times Adopts Online Video, Changing from Within
Plans for TV Everywhere Bog Down
Staons 12 Online Rev To Soar
Walmart to Bridge Online Gap With Disc- to-Digital ABC, Nielsen Team To Measure iPad Video Consumpon March Madness Digital Viewing Generates $60 Million in Ad Sales
New Nielsen Rangs to Measure TV and Online Ads Together Connected Devices Become Key to Content Consumpon NBA League Pass: The Future of Online Sports Video
Apple TV set to be coming in 2013 Intel TV Plan Faces Long Odds Against Success Highlights fragmentaon: 19 million watched => 380 million didn't watch
Source: Nielsen
Superbowl Online A Proposal For Hollywood: Streaming Was To Survive TV Disrupon, it a Success? Go Completely Live
iPhones Are Staons Hoest Tool
Google Aims to Oer Kansas City TV
Sample of Stories and Announcements
How to meet Changing Customer Preferences?
Page 13

Page 14
Growth + Protability = Valuaon Escalaon

The Importance of Growth and Profitability Key Tenets
n n n n
Growth at the expense of profitability can be tolerated if there is a reasonable expectation of profitability or potential for value enablement or maintenance Profitability and cash flow generation are the ultimate fundamental prerequisites for any enterprise losses can be financed with the expectation of profitability Growth + Profitability = Valuation Escalation: The sweet spot for value creation Profit can be internally generated through operational success; however, profitability has equivalent relationship with cost avoidance in M&A: n Buy vs. Build: Avoid costs of enterprise replication n Tactical Strike: Avoid fallout and loss of profit from commercial attrition Partially explains why high valuations can be achieved for businesses in M&A
M&A Framework Growth

Generated or Facilitated
Protability
Generated or Facilitated
Valuaon Escalaon
Generated or Crystalized
Page 15
Risk Migaon = Valuaon Escalaon

Mitigation of Risks to Growth and Profitability Valuation Impact
n n
Business risk takes many forms; each risk has an impact on valuation in isolation and in an M&A transaction context Quantifying, projecting, shaping and controlling perceptions of risk avoidance or mitigation is an essential aspect of M&A preparation and execution
Representave Risks
How easy is it to execute a given plan of acon? Do we have the right people running the business; are they performing opmally as individuals and as a team? As sponsoring execuve, does this M&A deal help or hurt my career within [xyz] large company; do I know and trust the target and people? Are we making products that our current customers or new customers want to buy? Will customers buy the product we have developed for them? How successful will the enterprise be in entering new vercals (industries) or geographies? Are we meeng our customers needs or are we at risk of losing an account or installaon? Do we have the capital resources to execute on our plan with a reasonable likelihood of success? Can the capital we raise be deployed to create value sucient to oset the diluon associated with the nancing?
Type
Execuon
Operaonal How easy is it to run a business repeatable processes, available sta?
Product Market Customer Financial
Page 16
What Interests Public Market Investors?

Small Cap $300 Million - $1.5 Billion (S&P) Investment community demands high growth from small cap companies Requires substanal investment in sales and markeng Requires cash to nance growth; investor tolerance for reduced protability Low trading volume for micro-cap; no natural buyers Mid/Large Cap $1.5 Billion+ (S&P) Few large companies with substanal growth strong investor and analyst following Premium valuaon at aracve mulples Substanal liquidity in acvely traded stocks
High Growth
NO
YES
YES
YES
Large pool of potenal investments many large cap, low-growth stocks Investors focused on dividend and earnings stream Trade in ecient range, based on market-level mulples
Depressed share price can be more reecve of structural stock market Low/No circumstances than intrinsic value of business Growth Interesng to agitators and in context of a transacon
Market Capitalizaon
Page 17
Growth
Miranda Case Study: Instrucve Lesson

CAGR 2006 2011 11.1%
vs.
Growth substanally in excess of Industry

Consistent, Strong Protability ~20% EBITDA Margins
Dec 31, 2005 Dec 12, 2011
7.2%
Sector
42%
Dec 2005 Dec 13, 2005 Mar 26, 2011
Dec. 13, 2011, JEC and JMB iniate public agitaon for sale process Mar. 21, 2012, Miranda announces structured sale process
IPO
41%
Page 18
Miranda: Growth Story

Referenced Growth Drivers
IPO Prospectus
December 2005
Investor Presentaon
March 2012
Expansion by Service Providers HD Transions Channel Proliferaon Emerging Markets IPTV Digital Transion
Complexity at Service Providers HD Transion Channel Proliferaon Emerging Markets OTT / VOD
Underappreciated by Public Market Investors

Page 19
What is Market Rewarding?

TEV/Rev (LTM) Representave Public Companies Strategic Technology Sustainable Posion/Strong Growth Strong Operang Performance 3.0x Good Technology, Possibly Strategic Near-Term Growth Sustainable? Mixed Operang Performance 1.0x
Technology Mature or Underappreciated Uncertain or Evolving Growth Story Mixed Operang Performance
Page 20
Private Company Strategic Posioning

Small Appealing target for venture capital rms Need expectaon of connued growth Requires idenable exit Medium/Large Receiving inbound calls from growth equity/private equity investors Opportunity to go public when market condions are favorable
High Growth
Low/No Consider combinaon with other Growth business to benet from addional scale and resources
If stable, desirable lifestyle business Should growth escalate, addional capital required to fund operaons (VC)
Challenging to generate meaningful organic growth Consider divesng underperforming or non-core assets Purchase businesses to accelerate growth, improve posioning
Revenue Level
Page 21
Growth
Opportunity to selecvely augment growth with acquisions
Growth: Increasingly Dicult with Size

Typical Vendor Growth Rates At Various Revenue Levels
Leverage industry relaonships Sasfy unmet market need Provide a level of customer aenon uneconomical for larger vendors
Growth begins to slow as other vendors react, oering compeng soluons and discounts Challenge avoiding custom service oering for each client
All natural customers won Taking business from incumbent providers dicult to do on protable basis Increasingly dicult to innovate
Page 22
Organic Growth is Expensive

Common Size Income Statement (% of Revenue)
Item Revenue Gross Prot S&M R&D G&A Total OpEx Operang Income (% of Revenue) 100% 50-70% 30 40% 10 20% 10% 50 70% (20) 20%
Key Takeaways n Average industry participant generates 50-70% gross margin n Majority of operating budget spent on S&M (75% of marketing spent on NAB/IBC) n R&D budget varies across business models; typically 10 20% of revenue n G&A smallest component of operating budget n Total OpEx range requires 50 70% gross margin to break even
Page 23
Brightcove Case Study

Capital Intensive, Time Intensive to Build a SaaS Business
n
Despite positioning and growing market opportunity, substantial ongoing investments required in R&D, sales & marketing to generate growth
We have a history of losses, we expect to connue to incur losses and we may not achieve or sustain protability in the futureour operang losses will connue or even increase at least through 2012
Source: Brightcove IPO Prospectus
$150+M
($ mil) Revenue Growth % Gross Margin
2009 $36.2 48% 71% 35% 51% 26% ($3.1)
2010 $43.7 21% 65% 81% 84% 34%
2011 $63.6 46% 67% 35% 73% 29%
2012E1 $77.4 22%
2013E1 $98.3 27%
$63.6M
Operang Expenses % of Gross Prot: R&D S&M G&A
Capital Raised Annual (Post IPO) Sales
Op. Income
($17.4) ($16.1)
Source: Brightcove SEC Filings; (1) Thomson Financial
Page 24

Implicaons of End of Four-Year Purchase Cycle? Valuaon is a Funcon of Growth and Protability Where is the Growth? Impact of Accelerang Technology Change? Impact of Vendor Consolidaon Summary
Page 25
Media Technology: Industry Growth

2008 2012
Signicant Findings
(Source: Screen Digest)
2012 2015
Expectaons
2015
Expectaons Industry growth in-line with world economic growth (Source: IABM)
HD and le-based workows key market drivers Ongoing HD Transion sll less than half complete IP infrastructure is having a major impact Emerging markets will connue to experience double digit growth Purchase decisions are beginning to be based on operaonal funconality rather than technology Services have become an increasingly important poron of the market New technology purchasers are entering the market from other industries New vendors are taking advantage of IT trends and the movement towards cheaper (and oen more open) soware plaorms
2008 2009 2010 2011
Emerging markets connue to have strong economic growth addional acvity around Olympics, World Cup in Brazil IP transion accelerang as aging formats are replaced Services become even more signicant poron of total industry revenues
Zero Sum Game One vendors gain is another vendors loss
2012
2013
2014
2015
2016
2017
2018
No Growth
(~0% Growth)
(~5% Annual Growth)
Modest Growth
Negligible Growth (~2% Annual Growth)

Page 26
IABM Market Sizing
Connued shi to soware- focused, IT-based products
What is the True Addressable Market?

Market Segmentaon (Source: IABM 2008 Industry Guide Book)
18%
10%
9%
5%
18%
4%
32%
4%
Absolute Number of Potenal Sales
VS
Potenal Revenue Accessible Geographical
to extend our offerings into these new markets requires obviously a different marketing approach, different networks to sometimes different channel partners, different price points, different value propositions et cetera. So its a challenge for a small company - Michael Wellesley-Wesley, CEO Chyron, Q4 Earnings Call
Target Customer
Sales Dynamic
Low-Touch Vs. High-Touch
Sales Reach
Direct vs. Indirect Number of Sales Reps Markeng Budget Training Partner Relaonships
Page 27
Changing Customer Focus

Expectation of Revenue Shift Among Customers n IABM End-User survey confirms expectation among end-users of shift of revenue dollars from traditional broadcast to new mediums
Page 28
Changing Customer Focus in Context

Disproportionate Focus on Online, Emerging Mediums
n
Revenues from emerging mediums remain insignificant in context of traditional business models; however substantial attention from end-users of technology
US Online Video Adversing Spending

June 2011 Forecast June 2007 Forecast
Online video spend will be 3.6% of TV in 2011 Youtube may account for greater than 60% of market(1) Even with growth, marketers in 2015 will spend $100 on television ads for every $10 for online video
Source: eMarketer, (1) Ci Investment Research

Page 29
Online Video Predicons 2012

The massive amount of money we have been seeing poured into video ad-networks this year (2011) will allow a more aggressive fight for market share and significant margin cuts [ ] Ran Harnevo, SVP Video, AOL Revenue sourced directly and indirectly from linear TV advertising will be pursued to create scale, to sustain overall revenue growth, and to defray the growing cost of securing quality, premium and super premium video content. As a result, more aggressive monetization will drive the acute and existential need for analytical. Bill Lederer, CEO, Kantar Video Companies like Ericsson, Cisco, Motorola Mobility, Technicolor and others will finally sell or spin off their set-top divisions. The groups are generally less strategic, not growing in meaningful size (and sometimes shrinking), and IP video needs a new wave of development that current set top groups are better at starting with a clean slate. Ben Weinberger, CEO and Co-Founder, Digitalsmiths Mobile video is continuing to grow at a phenomenal rate. Mobile web searches have grown five times over the past two years. YouTube alone gets more than 400M mobile views a day, representing 13% of our daily views. This means that more ad views will now come from smartphones and tablets. Suzie Reider, Head of Ad Sales, YouTube and Google Display
Predicon #1: Online Video Adversing Matures
Predicon #2: Connected and Mobile Devices Dominate
Predicon #3: Content Evolves
Everyone at the negotiations table is more savvy, and there will be a big push to extract as much value as possible for content and content distribution. Ian Blaine, CEO and Co-Founder, thePlatform During 2012 most online distributors will have the same content available, so now the race can begin on who can present differentiated content first. Jan Steenkamp, VP, Business Development, Irdeto
Source: VideoNuze
Page 30
Silverwood Industry Revenue Equaon

Industry Revenue
Content Produced
Content Distributed
Content Consumed
Technology Disrupon
Transion to soware cannibalizing former high- margin dedicated hardware

More than Ever More than Ever More than Ever
New content produced at fracon of price 5 10 years earlier IP distribuon shiing billions of dollars of technology budgets
Page 31

Page 32
Impact of External A Kodak Moment

Sustained success in technology requires constant evolution Share Price 2001-2011
From robust digital revenue growth, to our ability to manage effectively the decline in our traditional film business, to fulfillment of our digital acquisitions plan, our results are evidence we are building [. . .] [a] stronger Kodak for the future. Simply stated: our strategy is on course. - Antonio M. Perez, COO, 2004 Annual Report Kodak is now a thriving digital company, - Antonio M. Perez, CEO, Q4 2005 Earnings Announcement We recognized already the need to lower our cost structure and more tightly focus our portfolio to align We continue to be highly with the new economic realities. - Antonio M. Perez, CEO, Q4 2008 focused in completing our transformation to a digital, Earnings Call profitable and sustainable Company. - Antonio M. Perez, CEO, Q3 2011 Earnings Call
1/19/2012: Kodak files for Chapter 11 bankruptcy
~95%
11/1/2001: Kodak share price at $21.40
Apr 2004: Despite ongoing restructuring efforts, Kodak is removed from DJIA after 74 years
FY 2005FY 2010: Kodak reports loss from continuing operations
2010: Kodak sues Apple and RIM for patent infringement
2011: Kodak announces sale of image sensor business and 1,100 patents
11/1/2011: Kodak share price at $1.16
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Additional Examples:
Page 33
Eect of Soware, Service Transion

Implicaons of Transion for Exisng Revenues
$12B
Products likely to Transion to Soware and Services
Lost Revenue
$4B
Silverwood Esmates
Products unlikely to Transion to Soware and Services
Where are you?
Taken from Q4 2011 Avid Earnings Conference Call
Revenue growth sll eludes you and it is going to be fairly modest next year and yet theres a lot of posive drivers for the media creaon industry. Can you help us understand why it is that top-line growth is sll proving so dicult to achieve? - Paul Koster, JP Morgan As we transion our model to focus more on the media enterprise to focus more on soware and to focus more on recurring revenue you are going to see a dampening eectI hear everyone on the need for growth. We are taking a focus on how we can improve our protability with no growth - Gary Greeneld, CEO Avid
Page 34
A Dierent Sale Going Forward

Which category of customer is the most important?
(Big Broadcast Survey of Vendors)
Today
70% 60% 50% 40% 30% 20% 10% 0%
Next 2-3 Years

60% 50% 40% 30% 20%
60%
49%
47%
32%
4%
Engineering Operaon, Don't Know Finance, IT, Other
10% 0%
7%
Engineering Operaon, Finance, IT, Other Don't Know
No Longer a Predominantly Engineering Driven Purchase Decision
Engineering inuence in purchase decision marginalized
Page 35
Transion Revenue, Business Model

Margin Impact: Transition to Software and Services
n Margin
dollars from hardware sales to disappear unable to compete with large IT vendors n Transition to software model requires fundamental shift in business model: engineering, sales (direct vs. channel), marketing, G&A
Illustrave Example
Purpose-Built Soluon
Integrated Soluon
Revenue Loss 50% Soware Hardware
Eciency Gain Sales: $40,000 Gross Margin: $39,000 Sales: $10,000 Gross Margin: $2,000
Soware Sales: $100,000 Gross Margin: $55,000
Firmware Hardware
Page 36
Do you have a Hidden Soware Business?

Professional Services, Hardware
Low valuaon low margins, low growth, requires signicant scale
Revenue Mulples
Soware, Support
Principal focus of large buyers strong margins, intellectual property, recurring revenue 2.0x 5.0x+ 1.5x 2.0x+
0.2x 0.3x
0.5x 1.0x
Professional Services
Installaon Hardware Resale Integraon
Product Porolio Soware Hardware

Specialized General-Purpose Customized
Support
Recurring Standard Maintenance Cost and commitment to provide
SaaS Perpetual License Shrink-Wrap
Does Professional Services, Hardware drive enough addional Soware, Support sales to jusfy its existence?
Can Hardware and Soware elements be separated?
Page 37
The Value of Acon

Value Creation in Highlighting Software Component
n Software
business should be profitable for maximum effect in separation provides valuation floor for business n Moderate or no profitability has minimal impact on valuation of hardware component of business
Without Separaon of Soware Operaons
1.0x 1.5x $125.0 $187.5
Illustrave Example
With Separaon of Soware Operaons $30 50% $45

3.0x 5.0x $135.0 $225.0
$100
Soware Revenue Prot Contribuon Hardware Revenue
10% $110
14% $125
$20 50%
$80
0% $80
0% $80
1.0x 1.2x $80.0 $96.0
Year 1
Year 2
Year 3
Year 1
Year 2
Year 3 $215.0 $321.0
Page 38

Page 39
Vendor Breakdown: Consolidaon Inevitable

Market Study
1600+ Exhibitors 1500 suppliers 900 vendors 300 Members
Vendor Breakdown by Employee Counts

80% 60% 40% 20%
20% of Vendors Responsible for 80% of the Industrys Revenue

1,200 Vendors (Less than $5 Billion)
76% IABM Devoncro 20% 27% 55%
18% 4%
300 Vendors (Over $20 Billion) 1 - 100

Source: IABM
0%
Over 1,000+
101 - 1000
Page 40
Selected M&A Transacons

Date Acquirer Target 3/22/2012 NEC Convergys BSS 3/21/2012 XOR Media Seachange Broadcast 3/15/2012 Avaya Radvision 3/15/2012 Cisco NDS 3/13/2012 Ericsson Technicolor Broadcast 2/7/2012 Corel Roxio 2/7/2012 Ross Video FX-Motion Camera 1/27/12 Intel Real Networks Assets 1/6/2012 KIT digital Sezmi 12/22/2011 Motorola Mobility Setjam 12/22/2011 Akamai Contendo 12/21/2011 Thoma Bravo Telestream 12/14/2011 Court Square Encompass 12/13/2011 ASG Software Atempo 12/1/2011 Blackmagic Teranex 10/31/2011 Adobe Auditude 10/20/2011 Cisco BNI Video 10/10/2011 Arris BigBand 10/10/2011 Rimage Qumu 9/8/2011 Adobe Iridas 8/30/2011 DG Fastchannel EyeWonder 8/18/2011 HP Autonomy 8/15/2011 Google Motorola Mobility 7/20/2011 Orad IBIS 6/16/2011 DG Fastchannel MediaMind 5/2/2011 Limelight Clickability 4/11/2011 Level 3 Global Crossing 4/11/2011 KIT Digital ioko365 4/7/2011 Blinkx plc Burst Media 3/21/2011 Polycom, Inc. Accordent 3/16/2011 KIT Digital Polymedia 3/15/2011 Carlyle Group The Foundry Enterprise Value $449.0 NM $175.0 $4,942.4 $24.9 NM NM $120.0 $27.0 NM $268.0 NM $500.0 NM NM $120.0 $99.0 $53.0 $51.8 $9.5 $66.0 $10,462.7 $8,984.2 $2.1 $422.7 $10.0 $2,904.0 $79.4 $30.1 $50.0 $38.6 $120.0 EV/Revenue 1.4x NM 2.2x 5.0x 0.2x NM NM NM 1.4x NM 8.9x NM NM NM NM NM NM 0.6x 5.0x NM 1.8x 11.2x 0.7x NM 5.0x 1.8x 1.1x 1.5x 0.8x 6.4x 1.7x 5.0x
Current M&A Environment
Substantial volume of
deals over past year consistent transaction flow
Wide range of revenue Strong valuations for

strategic technologies
multiples for transactions
EV/Revenue Mean Median High Low 3.2x 1.8x 11.2x 0.2x
Source: Capital IQ, Thomson One, Press Releases, Industry Sources
Page 41
M&A Perspecves Large Vendors

Quotes adapted from IBC session: Dening the Media Supply Industry
Great set of opportunies in this business for strategic consolidaonsnot enough pure size and he in any of our markets for the economics of just scale alone to make many of them make sense...they [acquisions] got to be strategic as well and got to take you into faster grow rates, or beer margins, or beer spaces and help accelerate growth Harris Morris, GM Broadcast Division Clearly this is an industry for consolidaon...if you look at the relave size of the largest players and the tail of the remaining players...this is just the beginning Alain Andreoli, CEO "From our perspecve it is all about strategic development, it's about addressing opportuniesunderstanding where the business is going and where there are strategic gaps or opportunies to cover Patrick Harshman, CEO [Omnibus was an opportunity] to accelerate development to address a fast growing market sector Strath Goodship, CEO
Page 42
M&A is a Natural Progression

Joining forces with Adobe provides us with an amazing opportunity to get our technology into more peoples hands Lin Kaiser CEO and Founder, IRIDAS
(Source: Adobe Press Release)
"This acquision by Grass Valley is great for PubliTronic's customers as the enre team in Apeldoorn can now enjoy the resources of a true mul-naonal company, complete with deep knowledge in video and server technologiesNow, together, our technologies can bring real cost and operaonal benets to the industry on a large scale. - Harold Vermeulen, Founder and Managing Director of PubliTronic.
(Source: Grass Valley Press Release)
This is an excing milestone for our companyWe are extremely happy to be part of the Blackmagic Design team. Blackmagic Designs global reach, leading edge technologies, widely recognized brand name, strong systems and networking experse and worldwide customer relaonships make it an ideal partner for Teranex. - Mike Poirier, General Manager of Teranex
(Source: Blackmagic Design Press Release)
Its a terric outcome for our customers, our employees, Cisco and our investorsWe built a great company, but we were at a pping point where our customers were telling us it was me to scale. - Conrad Clemson, Co-Founder and CEO BNI Video
(Source: CED Magazine, 10/20/2011)
Page 43
Who are the Consolidators?

Transacon Acvity (# of deals) in Media Technology Since 2008
(Source: Silverwood Partners)
21
20
25
25
21
Private Equity Firms

Representave Technology Companies and Associated Acquision Acvity in Sector
Page 44
Consolidator Breakdown: Strategic

Broader Technology
Technologies with broad use cases, aligning with internal product development Crical mass of revenue, strong revenue growth
Large, Industry Parcipants

Technologies on the crical path demonstrable visibility in commercializaon
Other Acve, Industry Parcipants

Looking for addional product funconality
Deal Interests
Adjacent vendors, alignment on vision of growing business
Businesses with exisng commercial relaonship and adjacency to product porolio
Transacon Types
Substanally cash, clean deal All cash, clean deal
Perfect informaon: know who is selling and what valuaon expectaons are
Creave structures with a poron in cash, but majority of consideraon in form of equity and conngent future payments
Page 45
Perspecve: Video vs. Broadcast

Notable Acquisions ($ spent) in Video Technology
Acquirers will Connue to Buy Video Technologies with Wider Applicability Beyond Broadcast
$14+ Billion $10+ Billion
~$15 Billion
~$1 Billion
~$1.5 Billion
Representave Acquisions
Page 46
Selected Private Equity Plaorms

Jul. 2000 Apr. 2010 Apr. 2011
Jan. 2008
Apr. 2010 Sep. 2010
Apr. 2011 Mar. 2011 Aug. 2011
Jul. 2008
Oct. 2008 Jan. 2009
Oct. 2010
Dec. 2010 Jan. 2011
Dec. 2011 Mar. 2012
Mar. 2009
Mar. 2010
Feb. 2011
Apr. 2012
Page 47
Private Equity: Compeve, Aggressive

Private Equity Firms Advantaged by Market Conditions
n n
Private Equity firms able to leverage current market dynamics to outbid strategic acquirers for businesses with strong profitability Able to move rapidly: substantial deal experience, existing equity funds, longstanding lender relationships
Transacon Mulples EBITDA Revenue 11x
10x 9x 2x 8x 7x 6x 5x 4x 1x 3x 2x 1x
Illustrave Example: Majority Transacon
Amount Retained Equity Cash Equity 2.0x 3.0x 3.0x 4.0x 3.0x 4.0x
Post-Closing Ownership 25% - 40% 60% - 75%
Target Annual Return
20% - 30% Prevailing Rates
EBITDA: 20% 30%
Debt
Page 48

Page 49
Business Transformaons
Predominantly Hardware
Why Transform?
Valuaon Increase (ulmately) Operaonal Streamlining Strategic Clarity Respond to customer demand immediacy of funconality
How to Transform?
Decisive acon required Challenging to alter instuonal mindset Oen takes signicant investment and me Many mes requires divestures and acquisions
Predominantly Soware
Soware-as-a-Service (SaaS)
Page 50
Being Public can be an Advantage

Brightcove's CEO: This Is What's Great, And Terrible About Doing An IPO March 20, 2012 (Source: Business Insider) Business Insider: What's it like being a public company?
The market will nd you as long as you are either large, have demonstrable growth, or a story aligning with market interest
Jeremy Allaire: We often got asked, "Why are you going public now?" There are a whole bunch of reasons. One is, I've always said we're trying to build a global independent company and at some point that means becoming a public company. I think the other big thing is that a large amount of our business is with other public companies, and public companies doing business with other public companies matters, there's a credibility and a transparency that's there that is very real. I think having currency, both capital and equity currencies, is valuable for investments or acquisitions. So those are a bunch of reasons and I think they're all quite valid.
Opportunity for immediate value recognion Currency for growth investments and acquisions Provides customers greater comfort in nancial capacity Access to large instuonal investors dearth of available video-focused investments
Evertz hopes TSX gives it a profile for growth - June 29, 2006 (Source: globeandmail.com)
Evertz could afford to fund its growth plans with the cash it was generatingBut credibility had become a recurring issue for Evertz as it tried to win new clients, such as the major U.S. telecom companies that plan to load TV signals on their phone lines...
Page 51
Corporate Growth: Inecon Points

Principal way to accelerate through inecons is M&A
Expand markets for exisng products Expand product porolio for exisng customers Expand to other geographies Scale product, service oerings Time
Revenue
Page 52
Market Dynamics are an Opportunity

Substanal interest from Private Equity community Broader technology companies will connue to buy media technology vendors Public markets are welcoming of opportunies to invest in video technology
Large beer align with market, and improve posioning for greater appeal to Vendors large instuonal investors. Smaller Opportunity to posion as a must-have strategic technology Vendors acquision for larger vendors. All Vendors
Opportunity to take advantage of ongoing technology disrupon and benet from changing market dynamics.
Opportunity to acquire technologies to accelerate product development,
Page 53
References: IABM
Addional informaon is available at: www.theiabm.org/globalstudy
Page 54
References: Devoncro Partners
Provider of market research and strategic consulting services to a wide range of digital media clients. The company publishes a variety of syndicated market research reports and has been retained for numerous custom engagements by leading players in the broadcast, cable/satellite/IPTV, digital media, Pro-AV, private equity, and finance industries. Devoncroft was formed by Joe Zaller, a twenty year veteran of the digital media industry. Mr. Zaller is a frequent speaker at industry trade shows and events, and publishes a widely-read blog on the broadcast technology industry (http://blog.devoncroft.com/).
The BBS is an annual demand-side study of the global broadcast industry, which enables readers to improve strategic decision making, customer engagement, marketing strategy, and sales execution. More than 10,000 broadcast professionals in 100+ countries participated in the 2012 BBS, making it the largest ever and most comprehensive market study of the broadcast industry. For information on receiving a copy of the big broadcast survey, please contact Joe Zaller (jzaller@devoncroft.com)
Page 55
Important Informaon
The analysis and views expressed herein have been developed by Silverwood Partners LLC (Silverwood) or obtained from various third-parties. The material contained herein, while not guaranteed, is based on information that is believed to be reliable and accurate. This strategic industry analysis (Strategic Analysis) is prepared for general circulation and is circulated for general information only. It is not and is not intended to be a Research Report as defined by NASD Rule 2711 of the Financial Industry Regulatory Authority (FINRA) effective as of the date hereof or as amended. Specifically, this Strategic Analysis does not provide information reasonably sufficient upon which to base an investment decision as it does not have regard to the particular investment objectives, financial situation and the needs of any person or entity who may receive this document. Silverwood does not assess for any particular investor the suitability of any particular investment or the potential value of any particular investment. None of the information contained herein constitutes a recommendation or a solicitation by Silverwood or a recommendation or solicitation that any particular investor should purchase or sell any particular security in any amount, or at all. Investors should seek financial advice regarding the appropriateness of investing in the securities of any company mentioned in this Strategic Analysis and should understand that statements regarding future prospects may not be realized. Past performance is not necessarily a guide to future performance. This Strategic Analysis is not intended to provide tax, legal, or investment advice. Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities. Silverwood, its partners, members, officers, employees, contractors, referral sources or members of their families may have a long or short position in any securities of the companies mentioned in this Strategic Analysis or in related investments. As an investment bank, Silverwood may be actively seeking to be retained by, may actually be retained by or may have in the past been retained by any of the companies mentioned in this Strategic Analysis. In addition, Silverwood personnel may have in the past provided services to certain companies mentioned in this report when employed by other firms. Furthermore, consultants to or referral sources for Silverwood, or former employees of Silverwood with continuing compensation arrangements with Silverwood, may have, or may have clients with, positions in securities referenced in this Strategic Analysis. For information on recent investment banking relationships between Silverwood and the companies mentioned in this Strategic Analysis, please contact: Chief Compliance Officer, Silverwood Partners LLC, Silverwood Farm Place, 32 Pleasant Street, Sherborn, MA 01770. Silverwood does not (i) guarantee the accuracy, timeliness, completeness, or correct sequencing of the information contained herein, or (ii) warrant any results from the use of the information contained herein. This Strategic Analysis has been prepared as of the date indicated and may become unreliable because of subsequent market or economic circumstances. IN NO EVENT WILL SILVERWOOD, ITS PARTNERS, MEMBERS, OFFICERS, EMPLOYEES, CONTRACTORS, REFERRAL SOURCES AND RELATED PERSONS, OR OTHER PERSONS TRANSMITTING THIS STRATEGIC ANALYSIS BE LIABLE TO THE USER OR ANYONE ELSE FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR INDIRECT DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, TRADING LOSSES, INVESTMENT LOSSES AND DAMAGES THAT MAY RESULT FROM THE USE OF THIS STRATEGIC ANALYSIS OR FOR OMISSIONS OR INACCURACIES IN THIS STRATEGIC ANALYSIS) EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS DOCUMENT IS NOT A RESEARCH REPORT AS DEFINED BY NASD RULE 2711 OF FINRA. EFFECTIVE AS OF THE DATE HEREOF OR AS AMENDED. AS A CONDITION TO USING THIS STRATEGIC ANALYSIS, THE USER EXPRESSLY WAIVES ANY CLAIM THE USER MAY HAVE AGAINST SILVERWOOD, OR ANY OTHER PERSON WITH RESPECT TO THIS STRATEGIC ANALYSIS. THERE IS NO WARRANTY OF MERCHANTIBILITY, NO WARRANTY OF FITNESS FOR A PARTICULAR USE, AND NO WARRANTY OF NONINFRINGEMENT. THERE IS NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THIS STRATEGIC ANALYSIS OR THE INFORMATION CONTAINED HEREIN.
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Investment Bankers

Strategic Industry Analysis Nick McCoy 508.651.2441

nmccoy@silverwoodpartners.com Brian Zapf 508.651.8135 bzapf@silverwoodpartners.com

32 Pleasant Street Sherborn, MA 01770 www.silverwoodpartners.com

Member FINRA and SIPC

Invitaon: Sunday Strategy Session

Click here for full agenda on NAB website

Leading Media Technology Investment Bank

Copyright Silverwood Partners 2012

NAB 2012: Expected Talk of the Show

Miranda Provides Update Regarding Board Acons

Harris Corporaon Reviewing Porolio

.Our team is now laser-focused on

KIT Digital Implements Management and Board Changes

William Brown CEO, Earnings Call

$5 Billion 5x Revenue 18x EBITDA

Raised $55 Million Currently trades at 10x Revenue

Copyright Silverwood Partners 2012

NAB 2012: Key Strategic Topics 1 2 3 4 5 6

2011: Strong Operang Results

Relevant Business Unit Performance most recent operational period available

Copyright Silverwood Partners 2012

2010 2012: Growth Slowing

NAB 10 NAB 11 NAB 12

Source: CapitalIQ, Thomson One, Company filings

NAB 10 NAB 11 NAB 12

16 NAB 10 NAB 11 NAB 12

2012 Acve Calendar of Events

Copyright Silverwood Partners 2012

Timing Consideraons: Industry Cycle

During quadrennial events Nearing compleon of

adversing market and broader economy alternaves proliferang

Downturn No near-term events Technology cycle mature Slowing general economy

Stable to growing underlying

Few disrupve technology

Mulple technology Confusion on business

Copyright Silverwood Partners 2012

Four Year Broadcast Purchase Cycle

Order volumes increasing, values improved Price competition increased markedly

exceeding expectations Selling prices resilient

Confidence falling Customer deferrals significant Pressure on prices

Copyright Silverwood Partners 2012

IABM Market Sizing

Transacon Acvity; Expect Announcements

(Silverwood Industry Observaon)

Transacon Acvity Level

Copyright Silverwood Partners 2012

IABM Market Sizing

What Happens in 2013?

Percentage of Sales in Broadcast

Non-broadcast revenue to increase

2012 Forecasted GDP Growth by Country Source: IMF Page 11

Copyright Silverwood Partners 2012

What Happens in 2013 M&A Market?

Media Tech Industry Factors

Aer 2013? Evolving Value Chain

Plans for TV Everywhere Bog Down

Staons 12 Online Rev To Soar