Global Crossing Looks to Video Distribution to Expand Business Model

Global Crossing has acquired a video services provider in a bid to move past the dumb pipes” business model that has stymied many an operator as demand for traditional products falls to the wayside.

Global Crossing paid about $27 million for nine-year-old Genesis Networks; the total includes $15 million of debt. Genesis Networks, headquartered in New York, specializes in the distribution of content from entities including news agencies, production houses and sports organizations such as Major League Baseball. The company sells to operators such as broadband and cable providers, and even content-delivery experts, worldwide. Attaching itself to Global Crossing, then, gives Genesis Networks access to thousands of new customers in more than 700 cities.

At the same time, buying Genesis Networks moves Global Crossing up the value chain,” said Dave Carey, Global Crossings chief marketing officer. Thats because Global Crossing now heads into a more value-added, less price-sensitive way our network is being consumed,” since itll be carrying all of Genesis Networks IP packets.

Were moving from the dumb pipe to smart solutions,” Carey said.

Relying on video to do that is a timely and strategic decision. Infonetics Research recently forecast that global sales for video services including IPTV, cable and satellite video will top $250 billion by 2014. John Legere, CEO of Global Crossing, is counting on that growth.

The proliferation of HD and 3D video will soon outstrip the capacities of legacy technologies, making media-centric global fiber optic networks like ours the most viable option for broadcasters, producers and distributors,” Legere said in a prepared statement.

Indeed, Cisco Systems Inc.s Visual Networking Index says 3D and HD Internet video will make up 46 percent of consumer Internet video traffic within four years. The Global Crossing-Genesis Networks tie-up gives both companies additional reach and scale as the video market ramps up.

The M&A news came the same day Global Crossing released its third-quarter earnings results. After Wall Streets close, Global Crossing said it lost $7 million narrowing the gap from $41 million in losses a year ago on revenue of $648 million.

Shares of Global Crossing closed down .59 percent at $13.52.