Ericsson to Buy Microsoft’s Mediaroom TV-Software Unit

Photographer: Simon Dawson/Bloomberg

Visitors pass a sign outside the ST-Ericsson AB pavilion at the Mobile World Congress in Barcelona, Spain, on Feb. 26, 2013. Close

Visitors pass a sign outside the ST-Ericsson AB pavilion at the Mobile World Congress... Read More

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Photographer: Simon Dawson/Bloomberg

Visitors pass a sign outside the ST-Ericsson AB pavilion at the Mobile World Congress in Barcelona, Spain, on Feb. 26, 2013.

Ericsson AB (ERICB) agreed to buy Microsoft Corp. (MSFT)’s Mediaroom business, adding software used by phone companies to deliver television over the Internet.

Mediaroom, based in Mountain View, California, has more than 400 employees globally and will help Ericsson be the largest provider of so-called IPTV technology with a market share of over 25 percent, Ericsson said today in a statement. Ericsson paid less than $200 million, according to a person familiar with the deal who asked not to be identified because the details are confidential.

Ericsson, the largest maker of wireless networks, is seeking to cater to carriers that compete with cable, satellite and Web-based providers. The move will also help Stockholm-based Ericsson step up its emphasis on software and services amid accelerating competition in hardware.

Mediaroom “gives us a large installed based to work with and a great opportunity to move into an evolutionary path of IPTV into media distribution,” Per Borgklint, head of Ericsson’s Business Unit Support Solutions, said in a phone interview. “This gives us the bridgehead to grow this business significantly.”

Microsoft spokesmen referred Bloomberg to a blog post by the company in which it said the sale “is mutually beneficial and strategically aligned for both parties” and will let the Redmond, Washington-based company “commit 100 percent of its focus on consumer TV strategy with Xbox,” its game console.

The global IPTV market is estimated to reach 105 million subscribers in 2015, expanding to $45 billion by that year from $32 billion in 2013, Ericsson said. The deal is expected to close in the second half of this year.

Ericsson advanced 0.3 percent to 77.85 kronor in Stockholm today. Microsoft declined less than 1 percent to $28.59 at the close in New York.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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