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Mergers, Acquisitions, and Downscaling in Tough Times

A few weeks ago, I wrote about the HaiVision-VideoFurnace merger, a combination of hardware and software that appears to provide synergy between two complimentary technologies.

This week, ViewCast Corporation, the company that manufactures the ViewCast Osprey cards and Niagara streaming appliances, announced it had completed the acquisition of Ancept Media Server's assets.

Ancept was a digital asset management solution company, so the ViewCast play is another example of a hardware company moving over into software and services.

The initial release, on March 5, noted that ViewCast anticipated the total Ancept asset acquisition cost at a $1.17 million cash payment, issuing $400,000 of restricted ViewCast common stock, and the assumption of certain liabilities.

The final combination of $1.038 million in cash payments, issuance of 1,141,314 of restricted shares of ViewCast common stock and the assumption of $355,000 of deferred revenue liability. For this price, ViewCast purchased all of Ancept's operating assets, fixed assets, contracts, customer lists and intellectual property.

Viewcast sees the completed acquisition as a way to step beyond streaming and move down the value chain to content creation and asset management.

"This acquisition is a strategic step towards expanding the size and capabilities of ViewCast," said Dave Stoner, ViewCast's CEO, "In one of the markets still expanding today, . . . the combination will provide participants in the digital media marketplace with what they want--an integrated provider and one-stop solution for all their video management needs."

Stoner noted that the markets are continuing to expand, driven by high definition streaming and asset management. Stoner says the addressable market for ViewCast now grows to a potential $1 billion market, as the digital asset management market is anticipated to grow at a compound average growth rate of 26 per cent in 2009, to $632 million.

"We estimate that the market for our combined products and services is now approaching $1 billion annually," said Stoner. "The rapid expansion of these markets . . . underscores the need for structured, secure and scalable content management solutions delivered comprehensively, from one trusted provider. With the addition of Ancept, we can now very capably fill that role. Our sales and marketing teams are taking the steps necessary to immediately integrate our solutions platforms."

Integration issues aside, ViewCast has also expanded its distributorship in the UK and Ireland, through a strategic partnership with a New Hampshire company that will provide next-day product delivery and first-level reseller support during installation.

"We're pleased to be working with New Media AV in facilitating further adoption of the Osprey card across the European broadcast and post markets," said ViewCast Senior Vice President of Sales Gary J. Klembara.

ViewCast approaches this acquisition in a time when companies are beginning to assess their core competencies and modifying approaches to particular markets.

Hearst is a good example, making major news this week by downscaling an underperforming asset - the Seattle Post-Intelligencer newspaper - to a web-only offering, while at the same time bringing on a new media executive to look at acquisitions.

The Seattle Post-Intelligencer today began a web-only offering, although Hearst doesn't call it an online newspaper. Dubbed as "the nation’s largest daily newspaper to shift to an entirely digital news product," Hearst announced that March 17 would mark the final print issue of the newspaper as well as the first day of the new SeattlePI.com.

"The P-I has a rich 146-year history of service to the people of the Northwest, which makes the decision to stop publishing the newspaper an extraordinarily difficult one," said Frank A. Bennack, Jr., CEO, Hearst Corporation.

"Our goal now is to turn seattlepi.com into the leading news and information portal in the region," said Bennack, adding, "Seattlepi.com isn’t a newspaper online—it’s an effort to craft a new type of digital business with a robust, community news and information Web site at its core,"

The drop from 150 editorial employees to approximately 20, including reliance on blogs and a start-up culture that will see a significant amount of streaming video come into play.

"The site won’t have specific reporters, editors or producers," said Michelle Nicolosi, SeattlePI.com's executive producer. "All staff are expected to write, edit, take photos, shoot video and produce multimedia."

Hearst is also pursuing additional monetization of its digital media assets, including potential acquisitions. George Kliavkoff, who helped launch Hulu.com and also assisted with NBC's negotiations with Apple for content on the iTunes store, has been hired by Hearst as its digital operations head.

Kliavkoff, who was NBC Universal’s chief digital officer, left that post last year, and the move to Hearst provides Kliavkoff an opportunity to expose Hearst - which owns portions of cable networks along with its larger newspaper empire - to the benefits of digital media and the Web.

One way Kliavkoff may approach this is via acquisitions of digital media assets.

""I do think it’s a good time to be acquiring digital media properties," Kliavkoff said in an interview with MediaMemo, "because they’re well priced compared to where they were a couple years ago."

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