After 80 years, Philips is getting out of the television business, entering into a long-term partnership with Hong Kong’s TPV Technology to form a new company that will develop and market televisions under the Philips brand. The new joint venture will be 70 percent owned by TPV, with Philips controlling the remaining 30 percent with an option to unload it in as soon as five years. In exchange, Philips will receive royalties of at least €50 million per year and a proportion of sales.
“The partnership will help create the scale and focus needed for our Television business to return to profitability and to be successful in the very dynamic television industry,” said newly-installed Philips CEO Frans van Houten. “We are committed to the continuity of Philips Televisions in the market through this venture.”
Philips was one of the last television producers in Europe, and its departure from the consumer market basically leaves European TV production to high-end niche manufacturers like Bang & Olufsen and Loewe AG.
The company’s departure from the television business is just the latest withdrawal of Philips from the consumer marketplace: the company had previously left the mobile phone business, sold off its semiconductor operations in 2006. Philips had previously sold its computer display business to TPV back in 2004. Philips’ TV business had lost money for the last four years and was expected to post another loss this year; it employs about 4,000 people. Industry-watchers expect some of those employees will transition to the new joint venture; under the deal, the new company will be responsible for designing, manufacturing, and selling Philips-branded TVs around the world, with notable exceptions like mainland China, the United States, Canada, Mexico, India, and selected South American markets.
Philips’ new CEO Frans van Houten took over the company earlier this month, and had stated from the outside that addressing issues with the television division would be one of his top priorities—although few had expected Philips to simply walk away from it. Philips remains a world leading manufacturer of health care and lighting products, as well as selected consumer products like baby monitors, toothbrushes, razors, and electronic accessories.