Merrill-Backed Data Broadcasting Corp. Unveils Plan; Lowest-Cost PC Quotation Package To Date

A new PC-based, cable-delivered stock quote service is driving the price competition at the low end of the market even lower. For just under $90/month, including exchange fees, home investors will be able to receive a package of real-time equities and options data from Data Broadcasting Corp., Vienna, VA. The service is scheduled for launch by late January.

Data Broadcasting Corp. was founded last year as Datacast, Inc. by Financial News Network, Inc. Early in 1985, Merrill Lynch & Co., through its Communications Investment unit, acquired 40 per cent of Datacast for $4 million. Merrill also holds an indirect interest in the firm through its 9.9 per cent ownership of FNN. Datacast became Data Broadcasting several months ago as the result of a trademark conflict.

The company unveiled its proposed Marketwatch product at the recent Western Cable Show in Anaheim. DBC's quote stream will be broadcast on the vertical blanking interval of the Financial News Network TV signal, using technology similar to that developed for Merrill's other quote service venture, International Marketnet. Customers will receive the data using a DBC-provided cable decoder, which will pass the information along to the customer's PC. About 19 million cable homes receive the FNN signal.

At first blush, it might appear that Merrill is competing with itself -- that DBC's product will be competitive with the standalone PC quote terminal planned by Imnet. Not so, according to Wallace Sellers, Merrill Lynch senior vice president/director of strategic development. "I don't believe that many brokerage professionals would probably use the Data Broadcasting unless it was a one-man office," he says. "This is for the average investor -- an active trader but not a professional stock salesman."

Although plans are not firm, Merrill clearly has its eye on the Data Broadcasting pipeline for sending material other than quotes. "A Merrill Lynch customer could perhaps get a statement," says Sellers, or the network could be used for delivering investment newsletters.

DBC's Marketwatch will offer three levels of service -- real-time, delayed, and summary -- according to Jack Ault, the company's president. Summary service provides end-of-day or other updates but no dynamic quote information. Customers will be able to choose between NYSE/AMEX/NASDAQ and NYSE/AMEX/NASDAQ/OPRA, and will also receive Gannett's USA Today Update for business news.

Prices include data, software, and decoder box, with discounts for annual prepayment, says Ault. Real-time prices include exchange fees:

DBC would appear to face two immediate competitors for whatever low-end business there is. One is Lotus Development Corp., which is currently rolling out its Signal product (see related story, this issue). The other is Xpress Information Services, which is offering delayed Monchik-Weber quotes as part of its low-cost cable data service (MTR, October 1985).

Vis-a-vis Lotus, Ault points out that DBC requires no upfront investment, such as the $595 purchase of the Lotus Signal decoder. "Too many people have been stuck with too many boxes," he says. "The box is only worth something to us. If someone discontinues our service, why should we stick them with the price of the box?" The DBC product is also less expensive. A Signal subscriber would pay about $185/month for data that DBC sells for as little as $89.

On the subject of Xpress, "we've never thought of ourselves as going after the same market," says Ault. "We're going after the serious investor." Nevertheless, DBC and Xpress are both targeting similar slivers of the same cable universe, and must win favor with cable operators to succeed. DBC plans to pay operators $1.50 per subscriber per month, says Ault, who concedes that although DBC's datastream is encoded in the FNN signal, cable operators are under no obligation to carry it. "Cable operators own their VBI and they can strip us out anytime they want," he says.

The Marketwatch service will be promoted through 30-second ads on FNN. The ads will invite viewers to send in $10 for a demo disk. Ault is convinced the demo will sell the service.