Cisco gets out of the video business, sells SPVSS back to Permira for reported $1B

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Six years after buying NPD Group from Permira for around $5 billion, Cisco announced that it is selling many of the same assets back to the private equity group for a reported fifth of the price. 

Cisco announced that it will sell its Service Provider Video Software Solutions (SPVSS) unit to London-based Permira, with Bloomberg reporting the selling price at around $1 billion. The selected video technology assets, along with cloud technology services, will be packaged by Permira and launched as a new business. 

Abe Peled, Ph.D., former chairman and CEO of NDS and adviser to the Permira Funds, will serve as chairman of the new company, which will be transitioning around 3,500 employees. The new company will be “focused on developing and delivering video solutions for the Pay-TV industry.” It’s name will be unveiled when the transaction closes. 

Reports that Cisco was looking to unload its SPVSS unit began surfacing late last year. 

RELATED: Report: Cisco selling video software unit NDS, continues to exit linear pay TV sector

Assets included in the purchase are Cisco’s video security services, including smart cards and software solutions associated with conditional access security. Also included is video middleware, software solutions that provide advanced user experiences on pay TV set-tops.

As laid out by TechCrunch, Permira is also acquiring Cisco’s cloud video recording solutions for managing, storying and playing back recordings, as well as the cloud platform solutions for video consumption on any devices on any network. 

For Cisco, the divestiture fits a corporate strategy of exiting the pay TV vendor business, started in 2015, when the Silicon Valley giant offloaded set-top maker Scientific Atlanta to Technicolor for $600 million. 

Cisco took a bath on Scientific Atlanta, having paid $6.9 billion in 2006 for it. Amid the sale, John Chambers, then chairman and CEO of Cisco, said, “we are prioritizing our investments to deliver on our strategy of video in the cloud.”

Now under new CEO Chuck Robbins, Cisco is—as Bloomberg puts it—trying to shift “away from the expensive, fixed-purpose machines and locked-down software that once dominated the [video] industry.”

"We are proud of our innovation in video and the customer momentum that the Service Provider Video group has built," said Robbins in a statement. "With the leadership team and Abe as Chairman, the new company is well-positioned to drive this work forward and continue to deliver the solutions that meet the current and future needs of service provider video customers. Service providers remain a key customer segment for Cisco, and we look forward to continuing to partner with them to deliver new revenue-generating services and experiences." 

Added Peled: "This is a unique opportunity to lead and shape the video industry during its transition with the flexibility as a private company. The new company will have the scale, technology innovation, and world-class team to deliver outstanding go-to-market execution, customer engagement, and new end-user experiences. Cisco has built a profitable business in the video space with innovations to capitalize on IP distribution and cloud-based services. These combined assets provide a significant new opportunity for the new company. I am thrilled to be working again in this area with Permira who is committed to innovation and support for our Pay-TV customers, and look forward to the ongoing working relationship with Cisco in support of our mutual customers."