DG FastChannel, which provides "edge servers" that allow broadcasters to receive and store commercials and syndicated content as digital files, is acquiring its closest competitor, privately-held Pathfire, for $30 million through a stock purchase transaction.
Dallas-based DG says that the acquisition of Atlanta-based Pathfire, which had 2006 revenues of roughly $16 million, will be complementary as DG's main business is commercial delivery while Pathfire has focused on delivering syndicated shows like "Jeopardy" as well as transmitting news content from networks like ABC and CNN to their affiliates. Pathfire technology is installed in approximately 1,400 U.S. television stations.
The Pathfire acquisition is the second major deal in as many weeks for DG, which last week announced that it would acquire Point.360's advertising distribution business for $34 million. Upon completion of the two transactions, DG should have annual revenues in the range of $113 to $118 million, and EBITDA (Earnings before interest, taxes, depreciation and amortization)in the range of $35 to $38 million, according to Chairman and CEO Scott Ginsburg.
Consolidating the companies could eventually boost the prospects for delivering more high-definition commercials and syndicated content, as both Pathfire and DG FastChannel have been working separately to make their products high-definition capable, with DG delivering its first HD spots last November.
"As the broadcasting industry pushes forward with its preparation for high definition (HD) and content producers continue to adopt distribution of HD content, we expect that the combined platform will play a significant role throughout the media and advertising supply chain," said Ginsburg in a statement.