NEW YORK: The NewsMarket announced it plans to acquire Medialink Worldwide.
Shoba Purushothaman, chairman and cofounder of The NewsMarket, described the complementary nature of the merger according to Medialink's assets in content creation and strategic planning and NewsMarket's digital capabilities.
“The thought is that there is a business that has had traditional methods of doing things but [now] with new technology and new platforms,” she told PRWeek.
“When you put these assets together, there's a new story to be told,” added James Lonergan, president and CEO of NewsMarket (pictured). Lonergan joined the company as CEO in March when Purushothaman stepped down from the role and into the chair position.
“We've been in the video space,” he said. “Clients are looking for more of a full solution. We wanted to expand the footprint that we have.”
The merger agreement is subject to the approval of Medialink's shareholders at a special meeting of shareholders to be held in August 2009.
Medialink's top three executives will step down as part of the agreement. This includes founder and CEO Laurence Moskowitz, Larry Thomas, COO, and Ken Torosian, CFO.
Medialink had previously said it needed third-party investment or a buyer to ensure its survival.
"The merger with The NewsMarket, a pacesetter in providing digital media services on a global basis, has the full support of Medialink's board and executive officers," said Moskowitz in a statement. "This transaction is the best opportunity for our shareholders to realize value for their investment as it would eliminate the significant costs of being a small public company, and create synergies that address substantial obstacles we would otherwise face in attaining profitability."
Moskowitz could not immediately be reached for further comment.
The NewsMarket will acquire the outstanding shares of Medialink's common stock at a price of 20 cents per share in cash and will absorb outstanding liabilities, according to company statements. Medialink, which Moskowitz founded in 1986 and took public in 1997*, will cease to be a public company.
According to Purushothaman, the deal has been in the works since last December. She went on to say that Medialink was the company's only acquisition consideration because it's the “largest player in the market.”
“From a strategic standpoint,” added Lonergan, “it makes the biggest impact.”
Branding of the joint company will begin once the deal is closed, but the first priority is integration, Lonergan continued.
The two companies have differing customer bases – NewsMarket works on a long-term subscription basis and Medialink business is driven largely through work done via PR firms. The acquisition gives NewsMarket new opportunities to do business with PR agencies.
“It opens up for us an opportunity to really reach out to the agencies, which is an exciting thing for us,” said Purushothaman.
The two companies worked on the deal without outside PR or banking assistance.
Over the years, Medialink had established a leadership position in the broadcast PR sector through its technology and offerings. But in 2004 VNRs came under scrutiny because of their use by the federal government, later characterized as “covert propaganda” by the General Accounting Office (GAO). A negative perception of VNRs continued, and in 2007, the FCC fined Comcast for unidentified use of VNRs.
In recent times, Medialink has fallen on hard financial straits, with its stock price falling to around 20 cents and the company risked delisting from the NASDAQ.
Mark Weiner now the CEO of Prime Research North America helped launch the research arm of Medialink in 1994 and stayed on with the company for 11 years. He said Medialink, like a lot of companies, was unable to adapt to the digital transition that's impacting all of PR.
“When a company emerges as a market leader, part of that process is that companies become entrenched in what got them there,” said Weiner.
Weiner, though, believes the merger will form a strong unit.
“The new organization will have more resources and those resources can be used to invest in talent, technology, customer service, and innovation,” he said.
Others in the broadcast PR industry lament the loss of an industry leader.
“Medialink deserves credit for helping to build a broadcast PR industry that continues to be a central part of any organization's communications plan,” Doug Simon, president and CEO of DS Simon Productions, said in an e-mail to PRWeek. “This is a sad day for PR.”
*CORRECTION: An earlier version of this story incorrectly stated that Medialink entered its IPO in 1998. It was 1997.
Updated July 2, 1:31pm