Mead Data Central Buys Canada's Dataline For $10 Million, Will Integrate Real-Time Info With Text Databases

The Mead Data Central unit of Mead Corp. bought Canada's number two quote vendor, Toronto-based Dataline, Inc., for US$10.1 million. Mead, known mostly for its full-text databases, isn't expected to compete in the mainstream quote business, but will use Dataline information and technology to supplement and add value to its existing services.

The purchase price highlights the premium Telerate paid in its acquisition of CMQ Communications, Inc. (MTR, November 1987) Mead paid $10 million for a firm with 1987 revenue forecasts of $17 million, while Telerate paid $75 million for a company with 1987 revenue forecasts of $27 million. This means CMQ's Canadian equities business was probably worth no more than $25 million. The $50 million was the premium Telerate paid to regain its distribution rights.

"You can't stick around and play parochial games in only your own backyard," says Dataline president Joe Paradi, who owned about one-third of the company and will continue to run it for Mead. "We wanted to do two things," he says. "One is to take on the U.S., but, two, not to take on the big bad bears over there like Quotron and ADP." What the Mead acquisition will let Dataline do is play on the periphery of the mainstream quote business, but even that limited ambition takes deep pockets. "To go worldwide one needs some heavy-duty financing and Mead certainly has that," says Paradi.

Mead, which had 1986 revenues of $188 million, derives two chief benefits from the acquisition. First, it gets a new source of data to sell to its existing financial information customers. Second, it gets access to real-time software and systems that could spring it into some new business areas.

MDC's financial customers are mostly in the mergers and acquisitions departments at investment banks or on the buy-side. They use both the company's Nexis news retrieval service and its budding financial information service, which includes analyst reports and SEC filings.

"We have the mandate of developing some other real-time based financially-oriented services for the Mead general customer base," says Paradi. "There are a number of products that Mead has been unable to offer to its customers simply because the system they have is very highly optimized for the type of text search and retrieval that they have been so famous for."

"It would not be unreasonable to think of applications maybe like Compustat is doing today," says Dick Anderson, Mead vice president, corporate information services. "We probably won't start delivering those into the market until the latter part of '88, but our intent is to take Dataline's information and provide some analytical capabilities to it."

Another possibility is a financial information wire service, something "it's definitely on our platter to take a look at," says Anderson. "Dataline has just a very nice real-time software which not only will allow us to provide our end-users real-time information -- quotation-side -- but we can take that software and integrate that into our textual information and begin to provide real-time textual information."