Digital Ad Network Is on the Fast Track

05/14/2007 12:00 am EST


Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

Jim Collins, editor of OTC Insight, says DG Fast Channel is a leader in the cutting-edge technology of delivering advertising digitally to broadcasters and offers strong potential growth.

DG FastChannel (NASDAQ: DGIT) is a leading provider of digital technology services that enable the electronic delivery of advertisements from advertising agencies to traditional broadcasters and other media outlets.

They operate a nationwide digital network out of their Network Operation Center located in Irving, Texas, which links more than 5,000 advertisers and advertising agencies with more than 21,000 radio, television, cable, network, and print publishing destinations electronically throughout the United States and Canada.

DG FastChannel’s services include online creative research, media production and duplication, distribution, management of existing advertisements, and broadcast verification. The company owns and maintains an online database of content and credits of US television commercials for the advertising and TV commercial production industry.

Media production and duplication capabilities allow DGIT to provide customers with ancillary services, which are offered in addition to their primary distribution service. Their services include storage of client masters or storyboards, editing of materials, tagging content, dubbing, video duplication and copying of media onto various physical multimedia formats, such as CD, DVD, or tape.

Distribution entails providing primarily electronic and, to a lesser extent, physical distribution of broadcast advertising content to broadcast stations. The company offers various levels of digital video and audio distribution services to advertisers distributing content to broadcasters.

Last month, DG FastChannel entered into a definitive agreement to acquire privately held Pathfire, Inc. for $30 million through a stock purchase transaction. Pathfire is the primary distribution method for the majority of syndicated programming.

Pathfire has a leading position in news, entertainment, and video news releases to approximately 1,400 US television stations. [It also will] acquire Point.360’s (PTSX) Ads distribution operations. DGIT expects to achieve approximately $5 million to $7 million in operational synergies during the first year of operation following the closing of the transaction through the elimination of duplicative offices, telecom lines, equipment and resources.

For the quarter ended December 31, DGIT reported net income of 24 cents per share, compared to a loss of 20 cents reported in the prior year. Total revenue increased over 30% to $68.7 million. [A good part] of the increase was primarily from growth in the existing advertisement distribution operations.

DG FastChannel’s stock reached a multi-year high on April 17, before retreating modestly. (It closed at around $21 Friday—Editor.)

Of the approximately 12.5 million shares in float, banks and mutual funds own 9% and
management owns an additional 5% of the shares outstanding. The company has a relative strength of 99 and receives a rating of A for accumulation/distribution.

Chairman of the Board and CEO Scott K. Ginsburg joined DG FastChannel in 1998. He has a solid history of developing highly-focused, world-class teams and initiating innovative business solutions to advance industries.

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