In an effort to dig deeper into the syndication market, MarketWatch has bought out the financial information syndication provider Pinnacor (fka Screaming Media) for $103 million: $44 million in cash, plus 6.5 million shares of MKTW stock at an estimated exchange ratio of 0.2659.
Syndication already accounts for close to 50 percent of company’s revenues, mainly through its subsidiary BigCharts.com. The acquisition will bolster the technical capabilities and bring several hundred new financial-industry customers to MarketWatch.com, as the company moves more into paid financial-data services, according to a Dow Jones report. This comes at a time when the San Francisco company has been reluctant to spend on R&D, the story says.
Pinnacor had changed its name from Screaming Media about nine months ago, after it had purchased the assets of another financial technology services company Inlumen.
More details on the market in an InternetNews.com story: “The merger also signals continued contraction in the content aggregation space. Before adopting the Pinnacor name, ScreamingMedia was at the heart of negotiations to acquire iSyndicate. After missing out on the deal, the company acquired Stockpoint in a $21 million transaction to boost its offerings to the financial services industry. Interestingly, Stockpoint was one of MarketWatch.com’s main competitors.”
In related news, MarketWatch announced its Q2 results: revenues were down slightly to $11.1 million, compared to $12.0 million in the year-ago quarter. Net loss shrinked to $209,000, compared to a loss of $4.1 million in the year ago quarter. Ad revenues remained flat at $5.4 million; syndication/licensing revenues dropped to $5.3 million, a 5 percent drop from the year-ago quarter. “The decreases were due to the softness and consolidation in the financial services sector, which has traditionally been the licensing group’s primary focus,” and hence the reason why the company has bought Pinnacor: to broaden its base from just Wall Street into enterprise America.
Subscription revenues, which mainly consist of premium newsletters, increased approximately 11 percent over last quarter, to $359,000. This increase was due primarily to a full quarter of Calandra Report newsletter sales, which launched in March 2003.
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