UPI to Branch Out

Here's a story by George Garneau from the Oct. 28, 1989 Editor & Publisher:

The owners of United Press International are planning to buy two companies whose information products will be marketed alongside UPI's, according to new UPI vice chairman Joseph Taussig.

Taussig disclosed the proposed acquisition in an interview in which he drew the clearest outline yet of the intentions of UPI's parent company, New York-based Infotechnology Inc.

Plans for close cooperation by Infotech companies call for UPI to market and sell more and more kinds of information services, mainly from other sources.

Information will be processed by Infotech's Comtex Scientific Corp. and delivered via technology provided by its Data Broadcasting Corp.

New technology delivering more information is expected to add revenue from non-media clients beginning early next year, Taussig declared.

"We would expect to see the first dollar of synergistic revenues in January."

One of the takeover targets "might be classified as a news wire," and the other is a "market data" company, said Taussig. He declined to name either, but called one acquisition "imminent."

Taussig, who as vice president of Infotech's information and news group controls UPI and Comtex, said that since Infotech took control of UPI in March 1988, it has reduced costs and stabilized business.

The next stage is to pull together companies to create a sum larger than the pieces, said Taussig, who moved into UPI's Washington headquarters last July.

"The object is to marry Comtex products with UPI products, distribute them through DBC's electronic pipeline and sell them through UPI's sales force," Taussig said.

Under the scenario, the companies open their technologies and customer bases to one another. Costs drop when duplication and resources are shared. Products turned out at a lower cost yield more business.

With "cross subsidization," companies pay each other, a preferred rates, for the services they use, Taussig said.

For instance, sharing Standard & Poors' stock prices between UPI, DBC and Infotech's Financial News Network cable television operation will save $1 million a year, Taussig said.

DBC's system for moving data via the vertical blanking interval, the black band of 21 scanning lines between picture frames of a television signal, will substantially cut the costs of delivering information.

News services target businesses, associations and government agencies that want specific kinds of news: about an industry, a subject or a region.

A foundation of the strategy is more information coming from more sources.

"If there's more content, they sell a heck of a lot more," Taussig said. "We believe, ultimately, we will have sources in the hundreds."

Comtex, which is based in Stamford, Conn., and processes UPI and other news wires for distribution to data bases, will contract rights to information such as Securities and Exchange Commission filings and trade journals and newsletters and license them to UPI.

Information from other sources will be differentiated from the UPI report, Taussig said.

Newspapers will have "a relatively modest interest" in the new services, whose growth is projected in non-media clients, Taussig said, adding that newspapers in oil states should be interested in energy-related services.

UPI has reorganized its sales force by markets, such as newspaper, radio, television and several business sectors.

Newspapers, which mainly receive UPI by satellite, may or may not receive television signals. Now used by DBC to deliver stock prices to personal computers of 25,000 cable customers, the vertical blanking interval is being tested on over-the television at three Washington stations, Taussig said. Over-the air allows delivery to business offices having no cable but is less reliable than cable. It distorts over long distance and in information-crowded cities.

A decoder box at the client's site sorts codes on 8,000 stories a day, about 3,000 from UPI, and allows only preselected types to enter the client's computer.

Delivery via television is planned to begin next summer and to include everything UPI sells. Expectations are for 2,000 to 4,000 new customers, mostly outside the news business.

Taussig said he did not think plans would diminish UPI staffing "in the near term." He said the company would seek to add staff.

"We hope we will have money to invest in news gathering. Then we won't have to pay royalties," he said.

DBC is a subsidiary of FNN, which, in turn, is 45 percent held by Infotech. DBC sells FNN-DBC/MarketWatch, a low-cost stock option and news service.

Comtex distributes UPI and other services to data base vendors and publishes scientific and academic research. Infotech owns 58 percent of Comtex. It took a stake to settle a suit Infotech chairman Dr. Earl Brian filed against Mexican publisher Mario Vazquez Rana after Vazquez succeeded over Brian in a bid to buy UPI in 1986.

Infotech has told the Securities and Exchange Commission it is changing from a business development company to an operating company.

With such close cooperation, Taussig was asked, why not have one company?

"Someday that will probably all happen," he said.