UPDATE: In Continuing Systems Vendor Consolidation, DTI to Acquire PBS

By: Jim Rosenberg

Newspaper publishing software developer Digital Technology International, Springville, Utah, announced that through its investment partner, The Riverside Co., it has agreed to acquire Publishing Business Systems, based in St. Paul, Minn. Terms of the agreement were not disclosed.

DTI said the move supports its “strategy to grow through acquisition and deliver a complete and connected suite of systems to the news industry.” The agreement combines DTI’s editorial and advertising solutions and PBS’s circulation, advertising, production and business systems.

Announcing the deal, DTI CEO Don Oldham said the companies are “well matched in size, structure and financial performance and play off each other nicely in opportunities for market expansion.”

Oldham told E&P that DTI’s interest in having circulation and business systems predated Riverside’s purchase of his own company. He said DTI looked at companies in North America and overseas, and began talking to PBS in February of last year.

Oldham will continue to lead DTI, which will be managed by DTI and PBS personnel. Ron Bernier, who has served as the CEO of PBS since Steve Smith’s death in 2005, will retire.

The acquisition continues a years-long consolidation of the newspaper-publishing software industry. In more recent years, that consolidation has included the trend among vendors to broaden their product lines by bringing together back-end business systems and front-end publishing systems.

Thirty years after it was founded, PBS became part of that trend in 2003, when, after a two-year search for products, it acquired Canada’s Informatel Corp., which its then-president, Andre Paquette, said “lacked the size and distribution capability” to grow quickly. Informatel, which contributed classified, display, accounts receivable, classified pagination, ROP layout and other solutions, became PBS’s Canada business.

“We’re keeping that office and all of that staff” while “repositioning development there,” said Oldham of the business in Laval, Quebec. PBS Canada was at work on a browser-based classified advertising system that would compete against DTI for the same upper-end market segment. The acquisition, said Oldham, comes at a good point in the system’s development to be able to introduce a “slight redirection” of the product for use by smaller newspapers and still release the system this year, although probably not on time for Nexpo in April.

To speed things up, DTI’s PlanSpeed for classified pagination “will immediately replace” the product PBS was developing, said Oldham, adding that it is the only area of overlap and product-line restructuring.

A more substantial overlap is found among the companies installed base, where Oldham said “maybe a third of their customers overlap with ours.” With PBS software running at approximately 600 newspapers, that’s a lot of customers in common.

“Where there isn’t an overlap, and where we think it will really strengthen us is overseas,” said Oldham. PBS has some overseas customers; DTI has many more. Oldham said intends to take PBS to newspapers worldwide, citing a publisher with DTI editorial and advertising installations at dailies in Honduras’ two largest cities who “is looking for a circulation system right now.”

DTI’s principal competitor in the ad systems business, Mactive, was acquired last week by Atex, which last fall also acquired Unisys Corp.’s media software division, developer of a newspaper editorial system. Now headquartered in England, Atex is a product of perhaps the most consolidation. In addition to its two recent acquisitions, the company and its predecessors comprise not only the original business bought and later sold by Eastman Kodak, but also Dewar, Cybergraphic, Collier-Jackson, Matrix, Gazette Technologies, and The Barry Group.

DTI said it and PBS have “shared a similar vision of how technology can transform the industry” — a vision it associates with its own “Liquid Media” concept, which allows newspapers to share data, content and graphic elements with different systems across multiple print and electronic outlets. Using Liquid Media, data can be flowed into new or existing systems, regardless of platform, according to DTI, which says the approach enables newspapers “to evolve at their own pace, matching investment levels with priorities and needs.”

“We are giving newspapers an environment where they can work more effectively, share information more efficiently, and increase profitability in the face of new industry challenges,” Oldham said in a statement announcing the acquisition.

Founded 25 years ago as a subsidiary of family-owned Oldham Associates LLC, DTI (which has offices in Europe, Australia, and Latin America) also operated a commercial printing business. At about the time the software and printing businesses were to be separated, The Riverside Co. approached the family after identifying DTI as a profitable company in a growth position. It acquired DTI last year (E&P Online, June, 13, 2006). Oldham family members, according to one of them, were among the several DTI managers who joined in the investment. Citing at the time “significant financial resources,” Riverside co-CEO Stewart Kohl said his private investment firm would continue to “explore potential add-on candidates to further bolster DTI’s growth.”

Alyson O. Williams, DTI marketing manager, told E&P last June that management wanted DTI to grow under Riverside in areas where it had little history, such as business systems and Web publishing. The latter was developed through DTI’s relationship with Norwegian software developer Escenic, leading to the WebSpeed product that became a major component of DTI’s Liquid Media and was slated for adoption by all 17 Cox Newspapers dailies.

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