The Cole Papers August 2002

The good old days: Left, a reporter pounds on an Atex terminal sometime in the early 1980s. Right, the Atex 7000 J-11 computer, from the same era.

Directors four: The new management team at the new Atex Media Command (left to right): Robert Banner, executive chairman; Nancy Faunce, director for the Americas; Bernard Grinberg, director for Asia/Pacific, and Phil Lowe, director for Europe/Africa.

Media Command-Atex merger groups overlapping products

By virtue of its antecedents alone, the merger of Atex Media Solutions Inc. and Media Command Inc. touches the vast majority of -- if not every -- newspaper in North American.

Atex of Bedford, Mass., which has been serving newspapers for almost 30 years, was once the dominant provider of editorial and advertising systems. In the 1990s it acquired Dewar Information Systems Corp., a leading provider of systems to smaller publishers, as well as SyPress Oy, the Finnish maker of the Enterprise advertising system that Atex has successfully sold for the last seven years.

Media Command of Tampa, Fla., started but a mere 11 months ago. It is the combination of a handful of names familiar to most newspaper executives. They include Collier-Jackson, once the dominant provider of business and circulation software in the country whose software is still in hundreds of papers; Cybergraphic, the dominant supplier of editorial and advertising front-ends in Australia; MarketInfo, the first newspaper-specific data warehousing product, and Matrix, a circulation system just sold into the Southam chain of newspapers in Canada.

These companies all functioned under the name Geac Publishing Systems before last September.

A newly acquired division of Media Command, The Barry Group of Bethesda, Md., provides many publishers with marketing data-analysis services and software. In addition, its chief economist, Miles Groves, is a well-known former top executive of the Newspaper Association of America of Vienna, Va.

Both companies -- and their predecessor businesses -- have seen a certain degree of turmoil over the years. At one point Cybergraphic was going to ally with System Integrators Inc.; in the late 1980s Atex was allied with both IBM and CText (which eventually merged with System Integrators to become Net-Lynx) and in the 1990s it seemed that Atex was a hot potato, tossed from owner to owner.

Who will run this new company? What products and services will it offer? How did the merger come about?

Like the histories of the companies, the answers are fascinating.

People and projects
Atex Media Command (AMC) will be divided into three geographical regions, each with its own member on the board of directors. The Americas will be represented by Nancy Faunce, Europe and Africa by Phil Lowe and Asia/Pacific by Bernard Grinberg.

These three regional directors, along with Chief Financial Officer Patrick McGovern, will report to Robert Banner, who is the executive chairman of the board and one of the two top shareholders in the company. Åge Korsvold, the chief executive officer of Kistefos AS of Oslo, Norway, is chairman of the board.

Most recently Faunce was the chief operating officer of Atex Media Solutions. An old Atex hand, Faunce was a salesperson at the company starting in the late 1970s. She has also worked for Eastman Kodak Co. and in the 1990s began consulting with a number of newspaper systems suppliers, including Autologic Information International. A consulting engagement with Atex turned into an executive position in the late 1990s.

Lowe, the founder of Matrix Publishing Systems Ltd. of the United Kingdom, most recently was the chief executive officer and chief operating officer for Europe and the Americas of Media Command; he had an equity position in Media Command.

Grinberg, a longtime managing director of Cybergraphic Systems Pty. Ltd., most recently was Media Command's president and chief operating officer for Asia/Pacific. Grinberg too had an equity position in Media Command.

Australia-born Banner is a technology investor in the United Kingdom who most recently was chairman of the board at Media Command and handled the company's financial operations.

McGovern has been with Atex since 1996. He has a wealth of experience in high-tech finance, having worked for companies such as Interleaf and Digital Equipment Corp.

Grinberg and Lowe have each picked a No. Two:

  • In Asia/Pacific, Ross Wood is becoming chief executive officer of the company's Australia and New Zealand operations, which has headquarters in suburban Melbourne. Wood, who has a doctorate in computer science, is leaving John Fairfax Holdings Ltd., where he has been chief technology officer since 1996; previously, Wood had a 17-year career with News Ltd. in Australia and was group computer service manager when he left. Wood will manage the Melbourne office on a day-to-day basis; he'll also supervise the research and development team there.

  • In Europe/Africa, David Hall is becoming chief executive officer of the company's European operations. Hall is a 14-year veteran of Atex and has worked in sales, marketing and operations for the company throughout the United Kingdom and Europe. Hall will supervise the R&D teams in Nottingham (Matrix) and Latmer (Prestige editorial).

    Faunce, it appears, is anxious to directly run her own division and is not expected to immediately choose a second-in-command. And, as she says, she has "annexed" Finland from the European operation and will supervise not only R&D in Bedford, Tampa and Bethesda, but also in Oulu, Finland.

    Sales and marketing executive positions are still being juggled. What is known is that following a layoff at Unisys Media and Publishing in late June, William Wenger will be joining AMC. In his time with Unisys, Wenger had been vice president of North American publishing sales and director of new business development in the media and publishing group.

    At press time, Wenger's AMC title had not been determined.

    All the management directors seem united in the notion that the company will be growing, not shrinking (it has about 500 employees worldwide -- about 200 former Media Command people and about 300 former Atex people).

    Banner said he believes it will be necessary to find a new building for Atex in or around Bedford, as the existing facility "isn't particularly well adapted to their current activity." One of the first things Banner did at Media Command was to find new digs for its Tampa, Fla., offices.

    Products and prospects
    Looking at the combined product lines of the two companies is like looking at a wreck of two of those 18-wheelers that bring technology suppliers to trade shows like NEXPO: There's a little bit of everything and a lot of things that are very similar.

    In all the major product categories there are at least two offerings, if not three or four.

    "We'll start with the low-hanging fruit," said Faunce. She outlined a strategy of developing a technology and marketing team that would review the products and eliminate the obvious overlaps. She said the board had developed an "artificial" 90-day deadline to make the early determinations about product strategy.

    Faunce and other executives cautioned, though, that the company did not plan to abruptly eliminate key products. Customers "won't see salespeople showing up saying that we want you to change to this product because it's more convenient for us," said Lowe.

    "We're obviously going to provide support for everything," said Grinberg.

    "It's not going to be either this one or that one," said Faunce.

    Nonetheless, the four key executives all did acknowledge that there were some not-too-easy decisions to be made. As Grinberg said, "The hard one obviously is advertising."

    While Enterprise, the Atex advertising order entry system, has met with wide acceptance over the seven years the company has sold it, the product was developed a decade ago. In acknowledging this, Atex agreed to develop what's now known as Enterprise 2 for Dow Jones & Co. Inc., the South Brunswick, N.J.-based publisher of the Wall Street Journal and Barron's.

    In a deal signed at NEXPO 2000 in San Francisco, Atex agreed to build Dow Jones a browser-based advertising order entry system that will use standards such as Electronic Data Interchange (EDI) and eXtensible Markup Language (XML) and will be based on technologies from Oracle Corp. and Sun Microsystems Inc.

    Acknowledging that the Dow Jones project will go forward, one former Media Command executive is somewhat wistful about his legacy system. "Cyber$ell looks great on paper, but it has had no sales," said Grinberg.

    Faunce suggests that a "best of breed" philosophy might be pursued, with a twist. It's not that the best product would be chosen, but that the best component technologies would be chosen and integrated into the overlapping products, with a development evolution eventually producing one or two products per category.

    This type of product strategy is going to require a great deal of coordination among the various research-and-development teams. There are currently seven programming groups in four countries.

    Faunce expressed interest in developing a position within the company that would supervise and coordinate all research and development. Calling it "a very high priority from the board level," she said, "that position needs to be sorted out sooner rather than later."

    Banner also believes the position is important, though he seems to believe that the person for the job was already on board. "Identifying and empowering that position is something we all agree on," he said.

    The bottom line, though, is that existing customers won't be inconvenienced by the merger. "Support for our customer base is our No. One objective," said Faunce.

    Perspective and prognosis
    This august journal has well documented the history of Atex from its founding in a hay loft in the 1970s, through its life as a division of Eastman Kodak Co. in the 1980s, into the tumultuous early 1990s when it was owned by flamboyant British entrepreneurs and smooth-talking Norwegian software companies.

    In the latter part of the last decade the company gave glimmers of newfound energy with its Omnex content management systems, only to see those hopes dashed by the shutdown of Omnex development (see The Cole Papers, January 2001).

    An important piece of that history includes the 1996-97 spin-off from Sysdeco Group AS, a Norwegian software company. At the time that Atex was spun off, Sysdeco offered its shareholders a stake in Atex. Kistefos AS, whose chairman is Christen Sveaas, then the third-largest investor in Sysdeco, became a leading shareholder.

    Another such shareholder was Joost Tjaden, a private investor from the Netherlands who sits on the board of directors of TeleAtlas, a publicly traded Dutch digital mapping firm.

    After the spin-off, Kistefos controlled 26.6 percent of Atex Media Solutions Inc., whose stock was publicly traded on the Norwegian over-the-counter stock market.

    Apparently the cost of ramping up Omnex -- and then shutting it down -- was born by Kistefos. By 1997, the investment company owned almost 40 percent of Atex; in 1998, that figure grew to 47.5 percent, and in 1999, the stake jumped to 61 percent. By 2000, following the conversion of an $11 million loan into equity, Kistefos owned 73.7 percent of Atex. (All these numbers come from Kistefos' annual reports.)

    Under Chief Executive Officer Max Coebergh, who took over in 2000, the company eked out a small profit in 2001, but Atex's main investor was restless. In its 2001 annual report, Kistefos hinted that Atex was for sale: "Atex is expecting a process of consolidation to take place amongst software suppliers ... [and it] will play an active part in the expected processes of change in the market."

    It had become fairly common knowledge in the industry that Coebergh had been having difficulty with the Atex board. As a manager with two decades of experience in the industry -- in addition to two stints at Atex, Coebergh has worked for Mission Critical Technologies and Informational International Inc., as well as the Dutch newspaper publisher Sijthoff Pers B.V. -- Coebergh knew that he either needed to find new investors who saw things his way or be on his way.

    Coebergh was trying to find an investor who would keep the management team intact, but the Media Command offer seemed to be the most likely to be accepted by Kistefos. With the Media Command managers all stockholders of that company, Coebergh bowed out.

    Atex Media Command will be a publicly traded company, like Atex Media Solutions, and its board of directors will consist not only of Banner, Faunce, Grinberg and Lowe, but also Dutch investor Tjaden plus Kistefos' Korsvold and Ion Bogdaneris, a former Kistefos chief executive.

    The new company will be 55 percent controlled by Kistefos and 45 percent controlled by Banner, Grinberg and Lowe.

    One way to look at the board is three Kistefos people (Bogdaneris, Faunce and Korsvold) and three Media Command people (Banner, Grinberg and Lowe) with an outsider -- Tjaden -- as the tie-breaker.

    But that's not the way Grinberg or Banner view it.

    "I count Nancy Faunce on my side, rather than one of the others," said Grinberg.

    "Management is the ranking group on the board," said Banner. "We will have the common perception of what the good of the company is."

    Grinberg thinks that the personal financial position he, Lowe and Banner had in Media Command (and now have in AMC) was part of what attracted Kistefos to them.

    "Kistefos and their mates welcome people who've got their meat on the block, rather than hired guns," he suggested.

    What's it all mean?
    For the short term, existing customers -- whether Atex, The Barry Group, Collier-Jackson, Cybergraphic, MarketInfo or Matrix -- probably won't see much change. Atex customers will still call Bedford for support, just as Barry Group customers will call Bethesda and Geac customers will dial Tampa.

    Faunce's "low-hanging fruit" -- the duplicated products easily reduced -- will probably still be supported for the foreseeable future.

    Where the immediate change will come is in sales. As Faunce says, "Every single newspaper in North America is now a potential customer for something." There probably isn't a product category where AMC doesn't have an offering (or two or three).

    In an era where the cost of sales continues to skyrocket, a direct sales force that has dozens of products in its portfolio is one that can spread that cost-of-sale out across all of those products, rather than just a few.

    Where AMC will have problems is in culture -- both the cultures of the companies and the cultures of the countries.

    While the Atex people seem more at home in various foreign climes, the Geac people seem less adept. Cybergraphic has never sold well in the United States in large part because of the company's general inability to understand the culture; conversely, Australia's Cybergraphic (and its successor companies) has dominated the Antipodean marketplace unlike any other company.

    The notion that each geographic group will create a set of requirements unique to its countries that will be executed by research and development groups wherever needed is an appealing one. As Lowe likes to point out, "Microsoft is no different -- they have development efforts all over the world, too."

    As with any of the consolidation that the publishing systems industry has seen in the last decade, the real proof won't arrive next week or next month, but next year.

    What products and services AMC brings to NEXPO 2003 in Las Vegas will be a determining factor in how -- and whether -- the industry decides to accept the new company.

    -- dmc

    Atex Media Command,
    (781) 275-2323,
    e-mail: info@atex.com.

    From THE COLE PAPERS, August 2002, Copyright © 2002, All Rights Reserved.

  • Top | ColeGroup.com | Consulting | Cole Papers | NewsInc. | Cole's Store | Miscellanea | Search
    Copyright © 1990-2014, The Cole Group. All Rights Reserved. Contact us.
    Modified date: 08/15/2002, 10:57:50 AM.
    URL: http://www.colepapers.net/tcp.archive/cole_papers_02/TCP_02_08/amc.html