Sonic Foundry to Acquire MediaSite

Rich media software firm Sonic Foundry plans to offer clients an end-to-end video and audio production and management solution through its proposed purchase of privately held MediaSite.

Under the terms of the acquisition, MediaSite will receive 3,420,000 shares of Madison, Wis.-based Sonic Foundry’s stock, worth about $5.6 million at press time. Sonic Foundry said it also could issue an additional 360,000 shares if certain unspecified closing conditions are met, adding another $600,000 in value to the deal.

Both firms said they expect the acquisition to close in early November, pending approval by MediaSite shareholders. Following the acquisition, both companies will continue selling their products under their original names, as well as the other’s offerings. Ultimately, the firms will integrate their offerings, although the companies provided scant details of how future product lines would be organized.

The aim of the arrangement is to create a single source for technology solutions for rich media production, publishing and management. MediaSite, which is headquartered in Pittsburgh, Penn., is known for its rich media management tools, while Sonic Foundry is primarily focused on providing software for capturing and producing video and audio.

Asset management solutions like those offered by MediaSite are becoming increasing important to advertising agencies and television producers, as video and audio are routinely digitized to preserve quality and facilitate editing. However, sorting through and distributing gigabytes of real media often prove time-consuming and expensive, which is where MediaSite comes in.

Naturally, the firm — which counts WPP’s Ogilvy & Mather, Yahoo and Boeing as clients — is not alone in the space. Agencies and producers’ need for digital asset management has given rise to a host of firms, including well-known players Artesia and eMotion.

Demand has even piqued the interest of online ad networks, encouraging firms like CMGI’s Engage to dabble in the field, through an acquisition last year of MediaBridge and subsequent rollout of digital asset management products aimed at cross-media publishers.

Despite the competition, Sonic Foundry executives said they expect to enjoy a competitive advantage by providing production and management in a single offering, combining their own capture technologies with MediaSite’s two tools, Publisher — which indexes digital video assets — and WebFinder, a search tool.

“One of the greatest strategic opportunities we’ve identified is the need for a single source solution that manages rich media content through the entire process of production to publishing,” said Sonic Foundry chairman and chief executive Rimas Buinevicius. “This combination provides the industry with an unprecedented array of technologies, solutions and expertise that help solve the inadequacies of previous offerings and helps drive the industry’s overall growth.”