Bonneville Turns From Game To Hunter, Agrees To Buy Market Information From United Telecom

Bonneville Telecommunications Co. has suddenly turned from the would-be acquired to the would-be acquirer. Bonneville has agreed in principle to purchase a chief rival, Market Information, Inc., from United Telecommunications, Inc. The acquisition would make Bonneville one of the largest commodities industry quote vendors, and would position it to make a run at Knight-Ridder's Commodity News Services, Inc.

Separately, Bonneville has signed a deal to deliver McGraw-Hill's S&P Ticker III quote feed over its satellite and FM sideband network. The firm already distributes not only its own market data, but also that of Commodity Communications Corp. and Commodity Quotations, Inc.

Despite frequent denials (MTR, August 1986), United Telecom's interest in selling MII had long been rumored. United is chiefly a telephone company, and MII's $8 million in annual revenue hasn't made much of an impact. "I made a call on [current MII president] Paul Till and [former president] Bob Richards last fall in Kansas City," says Bonneville chief operating officer Charles McQuinn, "and asked if they would be interested in us carrying their data on our network. I mentioned that if it got to the point where they were interested in selling their company, to give me a call. In late February they gave me a call." MII claims more than 4,100 customers. About 2,200 are direct, and the balance receive service through four regional MII affiliate/ distributors. Bonneville has about 2,500 customers. The sale price wasn't announced, but isn't thought to involve much cash up front. "There's some investment now," says McQuinn, "but compared to the payout over time, there's more over time."

The MII acquisition is quite a turnabout for Bonneville, which was losing money, was put on the market, and came close to being sold last year, first to Equatorial Communications Co. (MTR, April 1986) and later to Commodity Quotations, Inc. (MTR, September 1986) Cutbacks and a reorganization, however, returned the unit to profitability late in the year.

It's also a turnabout because Bonneville itself began as an MII affiliate before the two firms parted company in the early 1980s. One serendipitous result of this earlier association is that their quote streams and network protocols are virtually identical, so the process of converting MII users to Bonneville's network is trivial by quote vendor standards.

The most likely scenario, says McQuinn, is for Bonneville to swap its data feed for MII's on MII's Equatorial satellite channel, so that satellite customers won't have to disturb their dishes. MII's FM sideband customers, however, will be moved to Bonneville's FM network. "The primary driving force of the whole thing is cost savings," says McQuinn.

But there may be more to it. With a larger customer base and significantly improved cash flow, Bonneville could be in a position to go after Commodity News Services in the high end of the business. The company already has rights to resell the Commodity World News wire, although it's currently only a printer-based service. Adding a small newsgathering operation to acquire cash prices could make Bonneville an inexpensive alternative to CNS. McQuinn declines comment on his plans. "I don't want to get anybody's interest up," he says. "We'll see what happens."

"I suppose that that is a possibility," says Charles Owens, sales chief at Commodity News Services, but "the commitment that we have in newsgathering and cash price gathering is something that has accumulated over 35-plus years, so I would think that would be a significant undertaking on their part to pursue that course of action. And based on what we believe to be the case with both of those operations, that might be a bigger cash commitment than either organization might be willing to make at this time."

Separately, Bonneville has strengthened its position as a "quote vendor's quote vendor" by signing a distribution contract with McGraw-Hill for its S&P Ticker III data feed. Bonneville will deliver the feed to McGraw-Hill customers via Equatorial satellite and FM sideband, and will have the right to resell the feed to its own customers.

Service won't begin for a few months, however, because two new pieces of hardware are required. One, an SDLC board for the Bonneville data receiver, will allow S&P customers to receive data synchronously. The other, an expansion board for the IBM-PC, will slow down the 9600 bits/second Ticker III feed so that PC-based Bonneville systems can handle it.

Bonneville has already succeeded in aggregating several other quote vendors onto its network. These include CQI's "Comstock," which it also resells to its own customers, and Commodity Communications Corp. and Commodity World News, both owned by Oster Communications.