Catalina Marketing DM, Research Businesses Up for Sale

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Catalina Marketing Corp. plans to sell its direct marketing, custom research and Tokyo-based outdoor advertising businesses in a decision announced yesterday.

The change in strategy follows the Nov. 3 resignation of chairman/CEO Dan Granger and his temporary replacement by company founder Michael O'Brien. It also accompanies the resignation of group president Patty Melanson, kicking off a change in the reporting structure.

"The board of directors and senior management are looking for profitable growth and some predictability in profitability and growth," said Susan Gear, Catalina Marketing director of marketing. "When you have proprietary technology and systems, you've got more security and the ability to predict your growth with more confidence."

The St. Petersburg, FL, company now will pay attention to its point-of-sale applications within the consumer packaged goods, pharmaceuticals and retail categories.

Other Catalina Marketing businesses are not so lucky.

The company aims to sell Catalina Marketing Direct Marketing Services, Costa Mesa, CA. The direct mail division was added when Catalina Marketing bought Market Logic in 1994.

The for-sale sign also hangs on Catalina Marketing Research Solutions. The custom research division previously was known as Alliance Research. Catalina Marketing bought that company in 1999.

Overseas, the firm wants to divest Pacific Media, its Japanese outdoor arm, whose services did not match others offered by Catalina Marketing, such as coupons.

It is not yet known how many jobs are threatened or accounts lost by this restructuring.

"Our first choice is to sell the divisions as an ongoing concern," Gear said. "That way they'll retain the jobs and value."

Catalina Marketing has been under pressure internally and externally.

It missed earnings targets in the past few years. The company in June was forced to delay its 10-K filing because of accounting irregularities that has led to an ongoing audit by PricewaterhouseCoopers.

Worse, the company as recently as February began an extensive marketing campaign to reshape the brand. All individual brands were subsumed under the Catalina Marketing umbrella. That campaign may have come to naught.

Ironically, Catalina Marketing's decision to exit the direct and research businesses follows an honor for its mail work.

J&J-Merck Consumer Pharmaceuticals recently won a GEM award at the 2003 Global Electronic Marketing conference for its Pepcid Enjoy! behavior-based direct mail campaign. Catalina Marketing was the campaign developer along with Partners in Loyalty Marketing.

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