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EXHIBIT 99.2
SONIC FOUNDRY TO ACQUIRE LEADING MEDIA SERVICE PROVIDER--
INTERNATIONAL IMAGE
Combination Will Create One of the Most Comprehensive Solutions Providers
Helping to Digitize and Manage the World's Media Assets
Wednesday, May 24, 2000
MADISON, WI - Sonic Foundry, Inc. (NASDAQ: SOFO), a leading developer and
marketer of Internet software tools, services, and systems, and privately held
International Image Services, Inc., one of North America's premier facilitators
for managing and digitizing media for the entertainment industry, announced
today that they have entered into a letter of intent for Sonic Foundry to
acquire International Image in a combined cash, debt, and stock transaction
valued at $24 million.
The combination of Sonic Foundry and International Image will offer the world's
media marketplace a single source for digitizing and managing their media
assets, particularly high-bandwidth, high-definition content, while providing
auto formatting of the same media for a wide variety of compressed and encoded
formats. The complete service offering will range from traditional media
production solutions for the television and film industry, broadband
digitization for HDTV, digitization and formatting for the emerging video on
demand market, and encoding and digitization for newly emerging streaming and
wireless formats. The combined entity will also offer the resources necessary to
expand Sonic Foundry's systems and consulting business effort, a business
designed to put Sonic Foundry's proprietary production technology in the hands
of content creators worldwide. In total, the combined company will have more
than 400 employees.
International Image, with facilities in Santa Monica, CA, and Toronto, Canada,
provides solutions that facilitate the distribution of content for Traditional
Broadcast Channels, Digital TV, Video-On-Demand, and the Internet. Through its
Media Asset Management initiative, the Company is also launching services to
assist content owners with the transition to data-centric storage and digital
delivery of their film, video, and related assets. International Image expects
to fulfill worldwide deliveries for over 5,200 hours of new broadcast content
for the 1999 - 2000 television season in addition to rendering other services to
its clients. International Image's client base includes major Hollywood studios
such as MGM, 20th Century Fox, Paramount, and DreamWorks as well as leading
independent production companies such as Alliance Atlantis (Canada), Hallmark,
Endemol (The Netherlands), Carsey Werner, HBO, and MTV. International Image's
audited 1999 revenues were approximately $10MM.
Sonic Foundry has distinguished itself as an industry leader in the convergence
of traditional media with various new digital technologies including the
Internet. Sonic Foundry's leading-edge suite of software products are designed
to create, edit, and deliver audio and video content for a variety of Internet
formats. Sonic Foundry's Media Services Division also provides a complete array
of value-added services that include broadcast, syndication, webcasting,
production, encoding, hosting, and streaming.
"The largest media companies are recognizing that there is a huge opportunity in
the digitization and delivery of their content through devices and over new
broadcast mediums such as the Internet," said Dan McLellan, president of
International Image. "Joining Sonic Foundry will allow us to provide a full
suite of technologies and services that is unmatched in the industry."
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"We're thrilled to have International Image join the Sonic Foundry family and
believe this will continue to create one of the most vital media and Internet
infrastructure companies in existence," said Rimas Buinevicius, chairman and
chief executive officer of Sonic Foundry, Inc. "We were truly impressed by the
quality, level of service, and sophisticated production technologies being used
at International Image and feel we have a common vision for the future of media
production and content management. Our customers will now have a single company
which can provide total solutions for what has been an extremely fragmented
marketplace."
Sonic Foundry's customer base already includes Microsoft, RealNetworks, Intervu,
Columbia Records, Capital Records, Disney, Universal, Virgin Records, Atlantic
Records, EMI, Sony Music, Launch.com, Sony Pictures Entertainment, New Line
Cinema, Columbia/TriStar, Warner Brothers, VH1.com, iFilm, Best Buy, Beyond.com,
Navarre, BMG Entertainment, Hewlett Packard, Macromedia, Creative Labs, Matrox,
Sony Electronics, and many more.
Sonic Foundry will acquire International Image by issuing 600,000 shares of
Sonic Foundry common stock valued at $20 per share, $4MM of short term notes
payable, and $8MM in cash in exchange for all outstanding shares of
International Image stock. The acquisition, which is expected to close during
the third fiscal quarter of 2000, is subject to certain customary closing
conditions.
About International Image
Founded in 1974, International Image is one of North America's leading suppliers
of technical services to the television program distribution market. The Company
provides a variety of solutions that allow conent owners to take full advantage
of traditional, new, and emerging distribution channels. With the arrival of the
digital revolution, content owners must contend with an assortment of
"advanced," "new media," and "high definition" formats. International Image
continues to introduce new solutions, including specialized MPEG compression
services for Video-On-Demand to C2(R), a unique technology that makes film-
originated, video-finished content compatible with numerous digital distribution
channels emerging globally.
Over the last two years, International Image has expanded its traditional
business to focus on its clients' growing need for electronic, databased
distribution. The Company is building the infrastructure to assist entertainment
content owners and distributors with the transition to digital storage and
delivery of their video assets. Media Asset Management (MAM) technologies and
solutions are expected to be an integral component of their business serving the
distribution industry for entertainment content.
About Sonic Foundry
Founded in 1991, Sonic Foundry is a leading developer and marketer of digital
media and Internet software tools, services, and systems. Sonic Foundry's award-
winning products and services are used worldwide for multimedia and Internet
applications, music and audio post-production, broadcast production, and digital
content creation. Built on the principle of "Create, Edit, and Deliver," Sonic
Foundry's products and services offer media consumers everywhere the ability to
create and capture media, edit the content, and deliver the information via
fixed media channels or electronic distribution. Additional information about
Sonic Foundry is available at:
http://www.sonicfoundry.com/news/presscenter.
Sonic Foundry Media Services(TM), a division of Sonic Foundry(R), Inc., offers
premium solutions for delivering audio and video content online. The division
provides the industry's most powerful
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combination of proprietary technologies incorporating high-end encoding,
webcasting, syndication systems, content and digital rights management, and
consulting services.
Certain statements contained in this news release regarding matters that are not
historical facts may be forward-looking statements. Because such forward-looking
statements include risks and uncertainties, actual results may differ materially
from those expressed in or implied by such forward-looking statements. Factors
that could cause actual results to differ materially include, but are not
limited to, uncertainties pertaining to continued market acceptance for the
Company's products, the Company's ability to succeed in capturing significant
revenues from media services, the effect of new competitors in the Company's
markets, and other risk factors identified from time to time in the Company's
filings with the Securities and Exchange Commission.
Press Contacts:
Sonic Foundry, Inc.
Dawn Tappy, Corporate Communications Manager
608.280.7495
[email protected]
