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With Fewer Vendors, More Opportunities?

Magazine article Editor & Publisher

With Fewer Vendors, More Opportunities?

Article excerpt

Prepress suppliers, in search of viability, seek broader product lines, markets, and economies of scale

Their market is shrinking, their once-impressive margins are falling nearly to the levels of supermarkets, and their customers expect them not only to provide more hand-holding than ever but also to finance the industry's research and development (R&D).

So why do vendors stay in the newspaper prepress business? "I guess you kind of get hooked on newspapers," John Barry, president and CEO of Brainworks Software, Sayville, N.Y., said during the recent Newspaper Association of America SuperConference here.

Addiction is as good an explanation as any. David Frenkel said his company, which sells editorial, classified advertising, and business software, was lucky to have a financial backer who knows -- and actually likes -- the industry. "The vanilla VCs [venture capitalists] who have heard about the newspaper business or have been in it once are usually cured for two lifetimes," said Frenkel, chief operating officer of Media Command Inc., Tampa, Fla.

Certainly, fewer prepress suppliers are willing or able to contend in a shrinking market, as newspapers fold, merge, and, especially, form clusters with centralized production. It's been a long-term trend, said David M. Cole, a newspaper consultant who publishes The Cole Papers newsletter: "There weren't a whole lot of system sales before March [2001], when we realized how badly things were going to go, and Sept. 11 knocked out about a dozen projects I personally know about."

Supplier consolidation is also a long-term trend. Grady Cooper, product marketing vice president at Harris Publishing Systems LLC, Melbourne, Fla., estimated that, of about 275 prepress exhibitors at last year's Nexpo, "at least a third" will be absorbed by other companies or defunct by this year's show in June.

"There's certainly consolidation among vendors," Frenkel said. "I know, because our company is buying them." Among companies that are now part of Media Command are SII (Systems Integrators Inc.), CompuText, and CText.

But for vendors, consolidation does not necessarily mean shrinking opportunities, executives say. …

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