Ascent Media buys Monitronics for $1.2b

Haislip talks to SSN about new owner
 - 
Friday, December 17, 2010

SANTA MONICA, Calif.—Ascent Media Corporation, a holding company based here, announced on Dec. 17 that it had agreed to purchase Monitronics International in a deal valued at $1.2 billion.

Prior to an Ascent investor call on Monday, Dec. 20, Monitronics president and CEO Mike Haislip told Security Systems News in an exclusive interview why he felt the acquisition was a sign of good things to come.

“We’re really excited about this because it brings a lot of stability having someone like Ascent behind us. It’s their first foray into security, but we think it’s a very good fit.”

Haislip noted that Ascent “understands the RMR business. They’ve been in cable TV. They understand how our business model works.”

The fact that Ascent chose to invest in the security industry, “says a lot,” Haislip said, “and it’s going to be great for us and our dealer program moving forward.”

Haislip and Monitronics’ CFO Mike Meyers will be staying on with the company going forward. In fact, according to Ascent EVP John Orr the management team at Monitronics was one of the strong selling points for the company.

“When we look at making acquisitions we’re looking at management as being the key asset of what you’re acquiring. These guys have a good management team and it was a very important consideration in doing this deal,” Orr told Security Systems News. “We’d be foolish to think we could come in and do things better than they’re doing them.”

The transaction was valued at approximately $1.2 billion, and Ascent’s investor call talked about some of the numbers. However, Ascent CEO William Fitzgerald and Monitronics’ Haislip said they were not currently at liberty to discuss many details. According to an Ascent press release on the purchase, while exclusive of certain hedge-related and other liabilities, the purchase includes the assumption of Monitronics’ existing structured financing. The cash portion of the merger consideration comprised an aggregate of $413 million and was funded by Ascent from cash on hand and $105 million in borrowing under a new $175 million credit facility.

Fitzgerald, in the Dec. 20 investor call, referred to Monitronics as compelling and explained Ascent’s interest in security in general and in Monitronics in particular.

 “We were extremely careful and deliberate about the decision we’ve made,” Fitzgerald said, noting the decision to buy was “a complete shift away from the AMG Media services business and into a very predictable and financially leveragable recurring revenue business—the residential security monitoring industry.”

Fitzgerald said the purchase of Monitronics provided Ascent “an attractive first step into a strong operating platform for future growth.”

Rumors of Monitronics pending sale surfaced in August. While the monitoring company itself was quiet at the time, industry observers speculated Abry, Monitronics’ long-time owner, was probably ready to divest itself of the Dallas-based company.

Monitronics is one of the largest third-party central stations in the U.S., providing alarm system monitoring for more than 650,000 residential, small business, corporate, and government customers.

Fitzgerald lauded Monitronics’ steady and consistent growth.

“We were immediately … excited about this opportunity. The strength of Monitronics’ model is evidenced by its financial results, which speak for themselves,” Fitzgerald said. “The company has grown revenue and EBITDA organically for 16 consecutive years, through two major recessions.”

Ascent Media, based in Santa Monica, Calif., is a holding company and owns 100 percent of its operating subsidiaries, which include Monitronics and Ascent Media Group. AMG is currently engaged primarily in the business of providing content and creative services to the media and entertainment industries in the United States, the United Kingdom and Singapore.

Monitronics was recently presented with the 2010 Excellence in Best Practices Award and the Company of the Year Award by market research company Frost & Sullivan.

Security Systems News Continues to report on this story.

Comments

It should come as no surprise that the electronic security industry has other eyes upon it for investment and growth potential purposes. Monitoring services, 3rd party contracted or not, will be analysed by potential suitors, looking for ways to gain further access into the residential "pipe". This pipe will allow them to capture more dollars, whether for monitoring stationary or mobile assets and the protection and tracking of people. In other words, it's kind of like a faucet...the more information dispensed or managed, the more money from each subscribers. The key is to offer safety, convenience and savings.

<p>Insightful George. Thank you for checking out the story and for the comment!</p>