Onstream Media To Acquire Narrowstep: I Don’t See The Synergy

Today, Onstream Media announced that it had agreed to acquire IPTV based platform provider Narrowstep in an all stock transaction. Shareholders of Narrowstep will receive 11.1 million shares of Onstream Media common stock plus have the opportunity to earn additional shares based on reaching future sales targets.

For 2007, Narrowstep had about $6 million in sales and total operating expenses were over $16 million, much of which was spent on the buildout of their own content delivery network. At the end of November of 2007, Narrowstep had about $6.5 million in cash and had started to shop the company. At their current burn rate, Narrowstep was close to having to raise another round this quarter in order to stay open.

Onstream Media, which is on a run rate to do between $15-20 million for 2008, and has a current market cap of around $40 million, gets more than 75% of its revenue from webcasting related services. On paper, this acquisition is an odd combination since Onstream Media is really in the services business and Narrowstep is in the software and platform business. Both companies have two very different business models and very different customers, in different regions of the world.

  • Drew Robertson

    Odd yes but if we take Iolo’s word for it, onstream is getting a steal. And they might know what to do with it.

  • bamabrad

    Was considering and talking to Narrowstep about employing their services-got any ideas on what they would like to do with this company and and what is the value of this deal-that is what monetary value does this put on Narrowstep?

  • There is no way to know what the real value is on Narrowstep since the deal involves a lot of potential stock options based on revenue numbers being met up to 18 months from now.
    I did have a call with Onstream Media and their real goal is to show revenue growth and traction with this new product 3-4 quarters from now. They think the integration will take about one quarter to accomplish.