MSGI Acquires List Firm Stevens-KnoxMarketing Services Group Inc., New York, last week acquired Stevens-Knox & Associates, New York, confirming speculation that last year's consolidation in the list industry will continue throughout 1999.
Ralph Stevens, president/CEO of Stevens-Knox, introduced Jeremy Barbera, chairman/CEO of MSGI, to direct marketing 20 years ago as the list manager for Barbera's employer, Lincoln Center. The two re-established contact last summer and began discussions that led to the Jan. 19 acquisition.
Financial terms of the cash deal were not disclosed but Barbera said it was in the same price range as the December 1997 acquisition of list firm Media Marketplace. The addition of Stevens-Knox, New York, with annual revenues of $30 million, gives MSGI, New York, annual revenues of $100 million.
The deal represents the second acquisition of a list firm in as many months. The SpeciaLISTS Ltd., Weehawken, NJ, a division of LCS Industries, was acquired by CustomerOne Corp., Buffalo, NY, in December as part as of $97.25 million deal that is expected to close this month.
Stevens said he doesn't expect his firm to be the last to seek a combination with a larger industry player.
"I see [acquisitions] happening more and more, and there are good reasons for it to happen," he said. "Clients look for scenarios where they don't have to go to seven different companies to do their direct marketing.''
Although Stevens-Knox will continue to operate as an autonomous subsidiary, it will have the data processing, teleservices, fulfillment and Internet resources of MSGI at its disposal.
"With [Stevens'] previous company, Computer Directions Group, he had list management, brokerage and a service bureau, so my first introduction to this [direct marketing] world was that all these things belonged together,'' Barbera said.
Stevens-Knox brings Barbera's integrated marketing services company new markets and decades of expertise in the catalog, ethnic and publishing sectors, he said. MSGI will use the Stevens-Knox London office as a base to build an entertainment business in the United Kingdom. Barbera said some of MSGI's Broadway clients start their shows in London. The combination also gives MSGI a presence in nine of the 10 largest U.S. markets, according to Barbera.
In turn, MSGI provides the list firm with new capabilities and a greater ability to compete.
"In this day and age with so many companies combining out there and offering all kinds of other resources, it seems the more arrows we have in our quiver the more valuable we can become for our clients," Stevens said.
Stevens co-founded the current company as list firm Woodruff-Stevens in 1972. That entity was merged with Computer Directions Corp. in 1976 to form Computer Directions Group. Stevens-Knox was formed in 1992 when Stevens and chairman Jim Knox bought out the list management and brokerage divisions.
The list operations of Media Marketplace, Newtown, PA, and Stevens-Knox will not be combined and they will not compete for the same clients. Barbera said Media Marketplace specializes in the management and brokerage of publishing, nonprofit and fundraising lists.
Barbera said this latest acquisition follows the MSGI business model of providing more capabilities to clients. In the last year, it has integrated its existing business units and formed a fulfillment unit. For 1999, Barbera is seeking to acquire an Internet portal along the lines of a GeoCities or Tripod and additional database operations.
"We've got a ways to go," he said. "For now, we're focusing on the integration of our direct marketing and Internet marketing platforms."
In a related matter, MSGI's Pegasus Internet subsidiary reported its 26 online ticketing clients saw increases of 200 percent to 600 percent in holiday Internet ticket sales and online sales as a percentage of total sales increased from 3 percent to 7 percent overall. Pegasus also reported that 80 percent of online buyers were first-time ticket buyers and that a majority of buyers joined online mailing databases as part of the order process. These names will be used for future e-mail marketing campaigns.