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

Cisco
Such a divestiture would fit a corporate strategy of exiting the pay TV vendor business.

Cisco Systems is reportedly taking offers for NDS Group, the video software company it acquired in 2012 for $5 billion, according to Bloomberg, which cited unnamed sources. 

Cisco has not commented on or confirmed the report. But the divestiture would fit 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.”

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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.”

RELATED: Technicolor completes acquisition of Cisco's CPE division, companies ink alliance for IoT, new video tech

The UK-based NDS Group makes middleware that locks and unlocks channels on set-tops, based on the programming the subscriber has paid for. The once highly regarded software company was founded in 1988 out of Israel and purchased in 1992 by News Corp. In 2009, News Corp. struck a $3.6 billion deal with private equity firm Permira that rendered NDS a privately held company. 

With the pay TV market now shrinking at a rate of 3.4% a year, expect Cisco to take a bath on NDS Group, too. 

As Multichannel News noted, for Cisco’s fiscal fourth quarter that ended July 29, the company said its service provider video unit saw a revenue decline of 10% to $227 million. And overall, that unit accounted for just 2% of Cisco’s revenue. Network switching was the largest revenue contributor during the three-month period, kicking in 28% of overall revenue. 

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