Tribune Co. won’t bother present management

The long anticipated and much discussed sale of Compton’s New Media is nearing completion. After being pursued by most of the big entertainment players, including R.R. Donnelley, Paramount, Disney and Sony, among others, Encyclopaedia Britannica and the Compton’s management team have agreed to sell Compton’s to the Tribune Company, parent of the Chicago Tribune, WGN (the television “super-station”) and the Chicago Cubs baseball team. A letter of intent has been signed to purchase the multimedia publisher-distributor for $57 million in cash. The deal is expected to close by the end of this month.

According to Stanley Frank, president and CEO of Compton’s, who, along with Compton’s general manager, Norm Bastin, will remain in charge of the company, the change of ownership from Encyclopaedia Britannica to Tribune is a positive step for Compton’s. The company was “under financial constraints” under EB, he says, and the Tribune organization has made it clear that it will be “very supportive about growth and producing new titles.”

The deal will enable Compton’s to “support everyone signed and under contract” with the organization, said Frank. Compton’s currently publishes approximately 50 titles, most of them CD-ROM-based. It is also the distributor of another 80 titles through its affiliated label program, which remains a big part of its business. It has a 40 percent share of the CD-ROM marketplace in retail distribution, and the company has tripled its growth this year. According to company representatives, Compton’s expects business to double for the next few years.

Surprisingly, Frank does not expect that growth to come from titles developed for the new platforms such as the 3DO Multiplayer. Instead, he expects the company to derive substantial growth from the existing CD-ROM-based computer platforms, including Macintosh and Windows.

Despite slow market acceptance for such products, he staunchly believes the market for computer-based systems for the home — as opposed to television-based systems — will triple or quadruple during the next year. He equally firmly believes that the only thing holding that growth back is not that people aren’t buying CD-ROM drives, but that there simply aren’t enough of them to buy. “If the world can manufacture as many CD-ROM players as everyone wants, then the world will be a rosy place,” he says. (To say we are uncertain about the accuracy of this assumption would be an understatement.)

In addition to increasing title development, Compton’s plans to develop new technologies and improve its core publishing tools, including the SmarTrieve natural language search engine. (Frank denies the rumors that SmarTrieve, which is considered one of Compton’s major assets among the interactive publishing community, was not included in the purchase. He added, however, that the deal was not yet final.)

The company also plans to expand through acquisitions. Although at this point, neither Tribune or Compton’s management will publicly discuss any of their outside negotiations, they did confirm that they are interested in purchasing companies with content and/or technology that is deemed a compatible fit with Compton’s existing product line.

If it ain’t broke… For Peter Black, president of Xiphias, a multimedia software developer distributed by Compton’s, the “Tribune does indeed appear to be the perfect partner. Tribune is a relatively bland participant, and at this stage of the year that’s particularly important,” said Black. “To have a bunch of young, suspender-clad executives come in and say ‘This is how we are going to do things,’ is what worried me.” In other words, Black hopes Tribune will leave Compton’s alone, at least until after the Christmas selling season, when approximately 70 percent of all CD-ROMs are sold.

According to insiders at Compton’s, Tribune does not plan to muck with the multimedia publisher’s distribution system — which includes its ground-breaking CD-ROM rental program through Major Video Concepts as well as its recently announced library lending program — even after the Christmas season is nothing more than a fond memory. It was in fact Compton’s established name in the retail channel that had so many companies in the entertainment industry checking it out while it was still on the selling block.

With this purchase, Tribune immediately becomes a player in the interactive media market. Whether it leaves Compton’s to develop on its own (which is unlikely) or becomes more directly involved in the interactive publishing and media creation business (and we have already heard of many plans in the works), Tribune’s vast holdings and deep pockets will no doubt make a strong impression on this emerging field.

David Baron