MQA and Universal Music Group to Collaborate on Advancing Hi-Res On-Demand Streaming
[MQA was introduced via an AES paper by Bob Stuart and Peter Craven in 2014; the paper had the daunting title of ” A Hierarchical Approach to Archiving and Distribution”. Since that time, MQA has been the subject of both acclaim and debate. Warner Music signed an agreement with MQA last May; now that UMG is on board, Sony Music is the only unsigned major label. —Ed.]
LONDON AND SANTA MONICA, FEBRUARY 16, 2017 – Music technology company MQA and Universal Music Group (UMG), the world-leader in music-based entertainment, announced today that the companies have entered into a multi-year agreement that will encode UMG’s extensive catalogue of master recordings in MQA’s industry-leading technology, promising to make some of the world’s most celebrated recordings available for the first time in Hi-Res Audio streaming.
Today’s announcement comes shortly after the launch of the cross-industry marketing campaign “Stream the Studio”, launched at the 2017 Consumer Electronics Show in Las Vegas and spearheaded by the DEG: the Digital Entertainment Group, to raise awareness of the advantages of Hi-Res Audio streaming.
Mike Jbara, CEO of MQA, commented, “We’re very pleased to be working with Universal Music to achieve our goal of moving studio-quality sound into the mainstream. Universal’s timeless catalogue and impressive artist roster will fuel music streaming services worldwide and enable the premium listening experience for all music fans.”
Michael Nash, Executive Vice President of Digital Strategy at UMG, said, “The promise of Hi-Res Audio streaming is becoming a reality, with one service already in the market and several more committed to launching this year. With MQA, we are working with a partner whose technology is among the best solutions for streaming Hi-Res Audio, and one that doesn’t ask music fans to compromise on sound quality for convenience. We’re looking forward to working with Mike and his team at MQA to make our industry-leading roster of artists and recordings available to music fans in the highest quality possible.”
MQA – the award-winning technology which delivers master quality audio in a file small enough to stream – debuted on global music and entertainment platform, TIDAL, at the beginning of this year, and is also available internationally on several music download services.
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Samsung’s Acting Chairman Arrested
[ Here’s the Reuters report of the latest events at Samsung.
Our second story is unusual for several reasons:
First, we ordinarily present press-releases with minimal comment. In this case, there is no relevant press-release, but I felt the story was significant, relevant, and worthy of mention.
Second, audiophiles may think, “what’s a cellphone company got to do with our little world?”—well, this particular cellphone company bought Harman International a few months ago, and Harman is the parent company of JBL, Mark Levinson, Revel, Infinity, and a number of other well-known consumer and pro audio brands. The sale was likely driven (pun intended) by Samsung’s need for Harman’s autonomous car technology, but the end result still overlaps our world.
In the past year Samsung has faced massive recalls of exploding cellphones and exploding washing machines, and now the heir and acting chairman of the massive conglomerate is under arrest. And you think times are tough for your company?
Looking back at better times, here’s a recap of Samsung’s purchase of Harman last November —Ed.]
SEOUL, Korea and STAMFORD, CT – Samsung Electronics (KRX: 005930) (“Samsung”) and Harman International Industries, Incorporated (NYSE: HAR) (“HARMAN”) today announced that they have entered into a definitive agreement under which Samsung will acquire HARMAN for $112.00 per share in cash, or total equity value of approximately $8.0 billion. Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung, and is expected to grow to more than $100 billion by 2025[1]. HARMAN is the market leader in connected car solutions, with more than 30 million vehicles currently equipped with its connected car and audio systems, including embedded infotainment, telematics, connected safety and security. Approximately 65% of HARMAN’s $7.0 billion of reported sales during the 12 months ended September 30, 2016 are automotive-related, and its order backlog for this market at June 30, 2016 was approximately $24 billion.
HARMAN’s experience designing and integrating sophisticated in-vehicle technologies, as well as its long-term relationships with most of the world’s largest automakers, will create significant growth opportunities for the combined business by enabling it to leverage Samsung’s expertise in connected mobility, semiconductors, user experience, displays and its global distribution channels. In addition, the combination of HARMAN’s brands and audio capabilities and Samsung’s expertise in consumer electronics will deliver enhanced customer benefits and elevate user experiences across Samsung’s complete portfolio of consumer and professional products and systems.
“HARMAN perfectly complements Samsung in terms of technologies, products and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time,” said Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer of Samsung Electronics. “As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognized portfolio of best-in-class products, HARMAN immediately establishes a strong foundation for Samsung to grow our automotive platform. Dinesh Paliwal is a proven global leader and, in our extensive discussions, we have developed deep respect for him, his strong senior leadership team and HARMAN’s talented employees. HARMAN’s sustained track record of rapid growth fueled by technology leadership and an unmatched automotive order pipeline reflects its commitment to innovation and customers.”
“The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade,” added Young Sohn, President and Chief Strategy Officer of Samsung Electronics. “We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialized electronic components and solutions continues to grow. Working together, we are confident that HARMAN can become a new kind of Tier 1 provider to the OEMs by delivering end-to-end solutions across the connected ecosystem.”
Dinesh Paliwal, HARMAN Chairman, President and CEO, stated, “This compelling all-cash transaction will deliver significant and immediate value to our shareholders and provide new opportunities for our employees as part of a larger, more diversified company. Today’s announcement is a testament to what we have achieved and the value that we have created for shareholders. Samsung is an ideal partner for HARMAN and this transaction will provide tremendous benefits to our automotive customers and consumers around the world. Combining Samsung’s strengths in leading-edge displays, connectivity and processing solutions with HARMAN’s technology leadership and long-standing customer relationships will enable OEMs to provide new offerings for their customers. Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace. This transaction will bring HARMAN and Samsung’s complementary strengths together to accelerate innovation in this space. More broadly, this investment underscores the strength of HARMAN’s employees, as well as our success and leadership across our markets. We look forward to working together with Samsung to elevate experiences for consumers worldwide.”
Customer Benefits and Significant Growth Opportunities
Samsung expects the combination to deliver significant growth opportunities and benefits to customers by leveraging Samsung’s and HARMAN’s complementary technologies, resulting in increased market penetration across important end markets.
- Automotive: Combining HARMAN’s leadership in new connected car technologies, including its top positions in infotainment, cyber security, over-the-air updates and telematics, with Samsung’s significant expertise and experience in connectivity technologies, including 5G, UX/UI, display technology and security solutions, will enhance HARMAN’s automotive and connected services businesses to drive greater sales and provide significant benefits as automakers speed the adoption of next-generation connected cars.
- Audio: HARMAN’s leading brands and cutting-edge audio systems include JBL®, Harman Kardon®, Mark Levinson®, AKG®, Lexicon®, Infinity®, and Revel®. The company also licenses Bowers & Wilkins® and Bang & Olufsen® brands for automotive. All of these brands will greatly enhance the competitiveness of Samsung’s mobile, display, virtual reality and wearable products to deliver a fully differentiated audio and visual experience for customers.
- Professional: The combination will also expand the combined company’s business-to-business platform through its ability to deliver integrated, large-scale audio and visual professional solutions at stadiums, concert facilities and other performance centers such as The John F. Kennedy Center for the Performing Arts and STAPLES Center – home of the GRAMMY Awards®.
- Connected Services: Samsung will gain access to HARMAN’s 8,000 software designers and engineers who are unlocking the potential of the IoT market. This collaboration will deliver the next generation of cloud-based consumer and enterprise experiences, as well as end-to-end services for the automotive market through the convergence of design, data and devices.
Operating Structure and Leadership
Upon closing, HARMAN will operate as a standalone Samsung subsidiary, and continue to be led by Dinesh Paliwal and HARMAN’s current management team. Samsung is pursuing a long-term growth strategy in automotive electronics, and plans to retain HARMAN’s work force, headquarters and facilities, as well as all of its consumer and professional audio brands. Samsung believes the combination will increase career development and advancement opportunities for the employees of both companies.
Samsung’s Automotive Electronics Business Team, which was established in December of 2015 to identify opportunities for Samsung in the automotive sector, will work closely with the HARMAN management team to realize the full growth potential of the combination.
Terms of the Transaction
The purchase price represents a premium of 28% based on HARMAN’s closing stock price on November 11, 2016 and a 37% premium to HARMAN’s 30-calendar day volume weighted average price ending November 11, 2016. Samsung expects to use cash on hand to fund the transaction. The agreement has been unanimously approved by the boards of directors of both companies.
The transaction, which is subject to approval by HARMAN shareholders, regulatory approvals and other customary closing conditions, is expected to close in mid-2017.
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