Cisco to Spend $5 Billion to Acquire Video Services Firm NDS

While Cisco has made strategic changes over the past year as it looks to focus on its “network-centric platform strategy”, including the shutting down of its Flip video unit and Umi consumer focused video conferencing line, the company today said it plans to spend approximately $5 billion to acquire NDS Group Ltd., a provider of video software and content security solutions for the television industry.

So what does NDS do? The company’s solutions help the television industry manage, monetize and securely deliver content to subscribers across multiple devices—from the television to a mobile device.

Cisco says the acquisition of UK-headquartered NDS will complement and accelerate the delivery of Cisco’s Videoscape Platform that enables service providers and media companies to deliver content. The company also added, that by acquiring NDS it would be able to expand its reach into emerging markets, such as China and India, where NDS has an established customer footprint.

The $5 billion deal, which has been approved by the boards of directors of both companies, includes the assumption of debt and retention-based incentives, to acquire the entire business and operations of NDS.

This is not Cisco’s first big acquisition in the television-related video space. In 2006, Cisco acquired cable set-top box maker Scientific-Atlanta in a $6.9 billion deal that was designed to help extend the company’s presence into the video market.

NDS counts major cable, satellite and broadband pay-TV operators as customers, including Astro, Bharti, BSkyB, Canal Plus, China Central Television (“CCTV”), Cox, DIRECTV, Kabel Deutschland, Sky Deutschland, Sky Italia, TataSky, UPC (a unit of Liberty Global) and Vodafone.

The acquisition is expected to close during the second half of calendar year 2012, subject to customary closing conditions. When transaction is complete, NDS’s operations, including sites in the United Kingdom, Israel, France, India and China, and its approximately 5,000 employees will join the Cisco Service Provider Video Technology Group (SPVTG), led by Senior Vice President and General Manager Jesper Andersen.

The company said Dr. Abe Peled, NDS Executive Chairman, will become Senior Vice President and Chief Strategist for Cisco’s Video & Collaboration Group. Dr. “Our strategy has always been driven by customer need and on capturing market transitions,”said Cisco CEO John Chambers.

“Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation.”