Global Eagle acquires IFE Services; plans to combine content service units in 2014

October 21, 2013

Multimedia

World small Global Eagle acquires IFE Services; plans to combine content service units in 2014

Making good on its stated promise to further consolidate the inflight entertainment and connectivity (IFEC) industry, and work towards creating an “entertainment in motion powerhouse”, Global Eagle Entertainment has bought the UK-based parent of IFE Services – Travel Entertainment Group Equity – for $36 million in cash.

The acquisition of Travel Entertainment Group Equity from private equity business GCP Capital Partners, together with Global Eagle’s recent acquisition of digital content specialist Post Modern Group (PMG), makes the firm “clearly the market leader” in content service provisioning, CFO Dave Davis tells the APEX Editor’s Blog. He believes rival Spafax is now the second largest Content Service Provider (CSP), after Global Eagle. Spafax could not be immediately reached for comment.

With a 20-year history, IFE Services provides a broad range of content solutions, spanning movies, TV programs, games, mobile apps, publications, safety videos and technical support to a worldwide client base of over 50 airline and cruise ship operators. For a “relatively short” period of time, IFE Services “will stay separate”, says Davis. However, Global Eagle’s goal is to combine the operations of its Advanced Inflight Alliance (AIA) subsidiary with IFE Services and Post Modern Group “into one group” in 2014.

“Things like back office, finance, human resources and IT will definitely be combined. In terms of [individual] brands, we may have some separate brands geographically, but our goal is to combine as much as possible,” says Davis, adding, “We think there are substantial synergies to be had in the combination.”

The integration could lead to some layoffs. “Exactly what employees we’ll keep is something we’ll plan for and deal with as we build the integration plan,” he says.

Global Eagle’s holdings also include subsidiary Row 44, which is bringing Ku-band inflight connectivity to multiple airlines. Because content provisioning and services – as provided by IFE Services, Post Modern Group and AIA – are a piece of a much larger IFEC market, Global Eagle managers “don’t’ think we’re brushing up against any [anti-]competitive issues at this point. We did analysis before completing this acquisition and concluded there are no issues,” says Davis.

Are further acquisitions in the offing? “Between PMG and IFE Services, we feel like we’re in a really good position at this point, but that’s not to say we wouldn’t be out there looking for potential acquisitions to fill in geographical holes, or strategic customers we want to pick up,” says the Global Eagle CFO. “But PMG and IFE Services were on the top of our radar screen.”

For the full year 2013 and on a stand-alone basis, IFE Services is expected to generate approximately $37 million to $40 million of annual revenue and approximately $7 million to $9 million of Adjusted EBITDA (projected revenue and certain components of adjusted EBITDA have been prepared in accordance with UK generally accepted accounting practice).

Global Eagle CEO John LaValle says in a statement, “The addition of IFE Services will significantly enhance our presence in multiple fast-growing, emerging markets where our combined service offerings are in demand. We look forward to working together with IFE’s CEO Andy McEwan and the talented team at IFE Services in bringing our innovative solutions to the worldwide travel industry.”

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About Mary Kirby

Editor in Chief - APEX Media Platform | Previously Senior Editor at Flight International where she led the magazine's coverage of in-flight entertainment and connectivity (IFEC) and aircraft interiors | Former proprietor of the highly-regarded Runway Girl blog, which focused on the passenger experience | Regularly speaks at industry conferences about airborne communications, ancillary revenue opportunities for airlines and social media | You can connect with Mary on Twitter, LinkedIn

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