Data Broadcasting Corporation Business Information, Profile, and History

History of Data Broadcasting Corporation

Data Broadcasting Corporation provides financial information services to private investors, financial institutions, and the professional investment community via FM transmission, cable, satellite broadcast, and the Internet. Specifically, the company provides real-time and delayed time stock quotes, bond values, futures, and options data for both domestic and international markets. The company also provides analysis in the form of news and commentary, fundamental data (such as 52 week highs and lows), historical data, foreign currency exchange rates, portfolio management, and advanced charting. Data Broadcasting's information services are packaged and marketed according to the technological capabilities and needs of each subscriber. Many of these services provide access to online trading.

Origins in an Early 1990s Bankruptcy

Data Broadcasting emerged as an autonomous company during the Chapter 11 bankruptcy proceedings of the Financial News Network, Inc. (FNN) in 1991. Among FNN's holdings at the time was a division specializing in real-time stock market data for individual investors. The Signal and QuoTrek brand stock quote services had been developed in 1982 by a company called Dataspeed. In 1984, Dataspeed's technology was acquired and folded into Lotus Development Corp, which created a new subsidiary called Lotus Information Network Corporation, or LINC. In 1990, FNN, a cable television network specializing in financial news, acquired LINC. By the following year, however, FNN was on the verge of disaster, with its top executive reportedly facing charges of bank fraud.

Hoping to salvage what they could from the failed company, FNN's creditors contacted noted turnaround artist Allan Tessler, who brought in his friend, a former head of Columbia Pictures and Twentieth Century Fox Films, Alan Hirschfield, to help sell off and reorganize FNN's holdings.

Tessler and Hirschfield pared away most of FNN's holdings, including the Learning Channel, which they sold to TCI's Discovery Channel. They kept FNN's successful data services company, Data Broadcasting. This division, which included the Signal and QuoTrek brand services for private investors, became a new entity, Data Broadcasting Corp. (DBC), incorporated in 1992. While the company's Signal service relayed information from the New York, NASDAQ, and American stock exchanges to desktop computers via cable or satellite, QuoTrek, a hand-held wireless receiver, allowed subscribers to receive stock information via FM transmission.

Although they had no intentions of acquiring a company when they went to help FNN out, Tessler and Hirschfield ended up buying Data Broadcasting, paying $1 million each for what was then a 25 percent interest in the public company. They distributed the remainder of its stock to FNN's creditors and former shareholders. Next, they moved the company's headquarters to Hirschfield's home town of Jackson Hole, Wyoming, presumably so that they could pursue their interests in skiing and fishing in the resort area.

New Management Builds the Company

The relatively small investment Tessler and Hirschfield made in Data Broadcasting paid off handsomely. The Signal real-time stock quote service, in particular, proved a solid business activity for DBC, becoming a leading source of stock quotes and related information due to its higher degree of compatibility between available analytic software packages for desktop computers and the Signal data feed, received through an external decoder box. The satellite relay gave private traders essentially the same service that brokerage firms and financial institutions received, but at much lower cost. Also, the pricing structure allowed subscribers to receive and pay only for the information they wanted. Enhancements to Signal included subscriptions to news and advisory services, and a custom Autolist function for active futures and options. With the financial data services providing the foundation for the company's activities, DBC attained first year revenues of $14.8 million, and a profit of $927,000.

DBC applied its data service technology to sports through a partnership with DataSport in 1992. Using QuoTrek as a format, the two companies created SporTrax to provide continuously updated scores of sporting events and other sports news via DBC's FM transmission network. DBC purchased DataSport in 1994. With the acquisition of Computer Sports World in 1995, DBC added historical sports information and Race Trax, which provided handicapping information for horse racing and other sports.

As its primary focus, however, DBC sought to enhance its financial data with complementary information relevant to investment decision-making. In 1994 DBC acquired Capital Management Sciences (CMS), a profitable private company best known for its BondEdge Internet-based service. The 1995 acquisition of competitor Broadcast International, Inc. (BII) included CheckRite International, a check verification company, and InStore Satellite Network, a provider of private satellite communications and services.

DBC launched an Internet website in 1995, initiating its entry in Internet-based information delivery. New software technology enabled the translation of satellite delivered information into DBC's website, providing stock quotes on a 15-minute delay. In addition to free delayed-time stock quotes, as well as financial and sports news, DBC's website included an overview of DBC's services, and free software which could be downloaded for desktop computer reception of the Signal data feed.

In conjunction with the website, DBC launched Brand Label Quotes, which offered stock quotes, on a 15 minute delay, to other information services on the Internet. DBC's 30 partnership agreements for the service involved Microsoft Network (MSN), Silicon Investor, and Business Wire in the United States, AsiaOne in Singapore, MoneyWorld in the United Kingdom, and The Electronic Mail & Guardian in South Africa. By mid-1996 DBC's website had received more than two million 'hits' a day. The reliability of DBC's stock information attracted new partners from diverse information-oriented companies to the Brand Label Quotes service. U.S. News and World Report and the Washington Post began to use the service, as did Charles Schwab & Co., which provided the market information to its active investors via its new PC-based, electronic stock trading system.

Delivery and Content Improvements: 1996--97

DBC facilitated PC-based financial analysis with the release of Signal for Windows 1.2 in January 1996. In addition to real time and delayed time stock charting capabilities, the software featured a stock quote window from which subscribers viewed the latest stock price, the day's high and low price, bid and ask information, and volume traded for over 100,000 stocks on all major domestic stock exchanges. Moreover, Signal for Windows provided real time stock data at a much lower cost than previously available. DBC also updated its QuoTrek service, including foreign currency exchange rates and bond data.

DBC complemented its financial information with new content and new services. Its CMS division introduced BondVu, an Internet-based, real time data service which covered over 900,000 domestic, fixed-income securities, and other bond-related information. DBC signed an agreement with Internet Financial Network (IFN), developer and owner of a software which provided access to the U.S. Securities and Exchange Commission's (SEC) Electronic Data Gathering Analysis and Retrieval system (EDGAR). The software transferred the information to the Internet within seconds after a company filed a form with the SEC on EDGAR. The agreement gave DBC exclusive Internet access to the SEC filings through IFN and also gave DBC the option to obtain a majority interest in IFN.

In April 1996 the company launched DBC MarketWatch, an Internet information service available on a subscription basis. MarketWatch data services included real time stock quotes, historical data, SEC filings, and direct Internet links to online brokerage firms. Targeted for individual investors, the $29.95 monthly rate included fees to the stock exchanges required to obtain real-time data. DBC also handled subscriber registration to the stock exchanges.

A partnership with Telesphere added stock market information for over 100 international stock and commodities exchanges to DBC's online data services. For the first time private investors were given access to exchanges in the United Kingdom, Germany, France, Japan, the Far East, and Latin America.

DBC expanded on its sports and gaming information services in 1996, acquiring odds maker Las Vegas Sports Consultants, as well as Instant Odds Network, the exclusive real time provider of betting odds through electronic transmission from six major Las Vegas casinos. The electronic products aligned with those companies were SportSignal, and Casino Instant Odds, respectively.

DBC sought to become a complete provider of investment related services to the individual investor with the launch of its online Trading Center. The Trading Center would give DBC's customers ready access to online brokerage firms through direct Internet links. E-TRADE Securities, which offered 24 hour, online stock trading services, was the first Internet brokerage firm to link to DBC's Trading Center. Later associates included CompuTrade and Charles Schwab.

DBC next expanded its information content to include government, agriculture, and business. Addition of legal and political information services came through the November 1996 acquisition of the Federal News Service (FNS). FNS provided transcripts from U.S. and Russian government proceedings, such as hearings, briefings, and press conferences, to over 200 customers, including governments, corporations, news organizations, lobbyists, and lawyers. In early 1997 DBC launched the AgCast Network, which offered agricultural data services to subscribers via satellite, on television, or through a computer receiver. AgCast provided commodities and futures pricing for agricultural products in the United States and worldwide, as well as news, weather, and agricultural information.

New technology allowed DBC to advance its Signal brand of market information services. In February 1997 the company released Signal for Windows 2.0 which enabled a desktop or laptop computer to receive information directly from DBC's private broadcast network via satellite, FM transmission, or cable.

DBC entered the market for professional investors with Signal I-Net, designed for small and mid-sized investment brokerage firms. Signal I-Net provided a wide array of market information via satellite, FM transmission, or cable. Launched in April 1997, Signal I-Net provided a wide array of market information.

Internet-Based Information Delivery Accelerates in 1997

DBC designed StockEdge and StockEdge Online specifically for the private investor. Launched within a few months of each other in mid-1997, the services allowed their subscribers to monitor a maximum of 50 stocks through a customized scrolling ticker. Both StockEdge services provided quotes from the New York, Nasdaq, and the American stock exchanges, as well as bid and ask information. DBC delivered StockEdge through its Signal broadcast network, and StockEdge Online via the Internet. These services offered many of the same features as Signal services, such as custom news alerts and real time portfolio value update, but with limited capabilities which enabled a lower fee more attractive to individuals.

In December 1997 DBC entered into a joint venture with CBS to improve its web-based financial information service, MarketWatch. Renamed CBS MarketWatch, CBS' involvement added a team of journalists, editors, and producers, as well as a marketing staff, while DBC provided the technological infrastructure. CBS MarketWatch targeted the mass consumer market for financial information.

DBC's success in 1997 was reflected in four Reader's Choice Awards from Stocks and Commodities Magazine. DBC won first place for, 'Best Real-Time Data,' the fourth year in a row, for, 'Best Futures Data,' and, 'Best Options Data.' BII's BMI MarketCenter won in the, 'Best Professional Trading Platform,' category.

Two of the DBC's subsidiaries, DBC West and CMS merged in 1997 for the purpose of providing Internet-based financial information services to institutional investors, such as banks, and mid- to large-sized investment brokerage companies. The new entity, DBCMS, introduced InSite in early 1998, as the professional community began to recognize the accuracy and speed of Internet-delivered market information. InSite utilized the best of Windows and Internet technologies to create a market information service often available only at great expense through such competitors as Bloomberg and Reuters. InSite combined existing services with newly available information. In addition to Signal, BondVu, and stock-related financial news, InSite provided futures and options information, foreign currency exchange, and analytic functions, such as the capacity to chart a company's stock price history.

DBC's transition to Internet-based subscription resulted in a net loss in fiscal year ended June 30, 1998. The loss of $4.8 million contrasted to a net income of $18.3 million in fiscal 1997. The company expected sales to rebound as the number of Internet customers continued to climb.

Expansion of Reach and Content in 1998

DBC's strategy at this time involved expanding the breadth of its content and divestiture of non-information services. The divestiture of CheckRite closed in May 1998, for $15.5 million, while DBC waited for a buyer for InStore Satellite. In September 1998 DBC acquired ADP Global Treasury Information Services (GTIS). Renamed GTIS Corporation, the acquisition extended DBC's reach into institutional markets and expanded the information content available to private investors.

DBC expanded the scope of StockEdge Online and Signal Online customer access through partnerships with stock brokerage firms. Trend Trader LLC offered the services to its customers free of charge, and, in exchange, allowed DBC's customers to order stock purchases through its Electronic Order Delivery System. Most brokerage firms simply offered the services at a discount, as did Ameritrade Holding Corp., Freeman Welwood, Birchtree Financial, and others. Global Link Securities offered StockEdge Online and Signal Online on its SuperTrade services in English, German, and Chinese. DBC extended its Brand Label Quotes service to Signal Online. Private label versions included Jack Carl Futures, Columbia Asset Management, and several others. Partnerships with brokerage firms helped DBC reach a milestone of 10,000 subscribers to Signal Online in February 1999.

DBC and CBS made an initial public offering (IPO) for MarketWatch.com in January 1999. DBC had experienced losses of $600,000 in MarketWatch.com for fiscal 1998, and expected those losses to continue. With the expected success of the IPO, DBC's stock almost tripled in late 1998. The IPO set a stock price at $17, but it quickly rose to $130 per share by the end of the first day, a 474 percent increase. As with many Internet companies, however, the stock value was associated more with potential than actual value, and the stock stabilized in the $70 to $80 range. CBS and DBC each retained 38% ownership in the company.

In May 1999 DBC launched eSignal, a total trading package which combined StockEdge and Signal in one service and gave subscribers the capability to trade stock online. The improvement attracted several online brokerage firms to DBC's Brand Label Quotes, including U.S. Securities and Futures Corp., Farr Financial, and Crown Futures, Inc. The new eSignal service automatically transferred to all subscribers of Signal Online. New subscribers to eSignal grew 100 percent in the last six months of fiscal year-ended June 30, 1999, and increased DBC's Internet customer base to over 15,000.

New software, launched in fall 1999, offered several improvements to traders. With MetaStock Professional 7.0, DataOnDemand allowed access to current and historical price data without having to perform several tedious functions before a chart could be created. A user simply entered a ticker symbol to view a particular type of chart. New capabilities included pager and email alerts for buy and sell requests, easier access to the user-created templates, and the ability to create a personal daily index like the Dow. DBC's eSignal 5.2 added after-hours trading, while Autolink simplified information access for specific stocks. A stock symbol entered into the quote window automatically transferred to analytic charts, options, Nasdaq Level II, news, and research functions, saving the user several tedious steps.

As it neared a new millennium DBC was upgrading the technology it used to provide financial services. The company chose Compaq's Alpha Servers to power its data feed to ensure continued timeliness as DBC expected the number of traders to grow and projected the number of stock transactions to increase dramatically.

Principal Subsidiaries: Broadcast International, Inc.; Capital Management Sciences, Inc.; Casino Instant Odds, Inc.; MarketWatch.com (38%); Datasport, Inc.; GTIS Corporation; Las Vegas Sports Consultants, Inc.

Principal Divisions: AgCast; Capital Management Sciences; DBC Europe (U.K.); DBC West; DBC Sports; Federal News Service; Global Treasury Information Services.

Principal Competitors: Bloomberg L.P., Bridge Information Systems, Inc.; Dow Jones and Company, Inc., Reuters Group plc.

Chronology

• Key Dates:

• 1992: Data Broadcasting is incorporated.
• 1994: Company acquires Capital Management Sciences.
• 1995: DBC enters into Internet-based information delivery.
• 1996: The DBC Online Trading Center is launched.
• 1998: Company begins expanding services for professional investors.