SOUTH BEND — Schurz Communications, which owns The South Bend Tribune, has acquired Michigan-based Online Tech, entering into the rapidly growing cloud computing market as it continues to evolve with the digital economy.
Todd Schurz, president and CEO of the company, said he was looking for a new market that aligned with the values and competencies of his family and company but also was in “an exciting and high growth area that we could build upon.”
“Our company is known for patient capital that assists growing companies realize their aspirations,” Schurz said. “Online Tech represents one of the most exciting opportunities in the cloud market today. The strong and proven management team has ambitious goals in this rapidly growing industry and we are excited to provide the support and managed IT services.”
Schurz Communications, headquartered in Mishawaka, historically invested in three markets — newspaper publishing, television and radio broadcasting, and cable television — but in late 2015 sold off its radio and television stations, including WSBT-TV. The company still owns several newspapers and cable companies across the country but, aiming to replace the cashflow from the broadcast assets, retained Moorgate Capital Partners to help with a growth and diversification strategy.
From about a dozen options, Moorgate identified cloud management services, an industry with revenues projected to surge from $60 billion in 2015 to $160 billion in the next five years, as Schurz’s best new market. The Schurz family and board of directors agreed. Moorgate introduced the company to Brad Cheedle and Tom Wilten of Cloudworthy, a startup the pair founded to pursue acquisitions of cloud providers. Cheedle will serve as chief executive officer of Online Tech, while Wilten will be chief financial officer.
More companies are finding it less costly and more efficient to contract out their most capital-intensive IT functions, such as data computing, servers, databases, networking, software and analytics, without the need to buy new hardware when it becomes obsolete.
“People are starting to realize that instead of writing millions of dollars worth of capital checks every three years, it makes more sense to get a monthly, predictable rate, and get access to virtually unlimited resources,” Cheedle said. “Always fresh, always current.”
After looking at hundreds of cloud computing companies, Schurz chose Online Tech. The Ann Arbor, Mich-based company, founded in 1994 as an internet service provider, has grown its revenues by 20 to 25 percent annually over the past five years after its acquisition by entrepreneur Yan Ness. It has more than 60 employees and 500 clients.
Online Tech currently has seven data centers in Ann Arbor, Flint, Mich., Detroit, Indianapolis and Kansas City, Mo.
Schurz plans to grow Online Tech beyond that regional footprint to a national scale, through both organic growth and buying other cloud computing companies.
Online Tech will target mid-sized companies — those with annual revenues between $20 million and $2 billion, including those whose IT management must comply with government regulations or industry standards for security.
“We really appeal to hospitals, anything in the medical areas, financial areas, IT services, people that are really looking for high-performance, high-resilient, certified, compliant-type environments,” Cheedle said. “So we’re going to hit the cities that have a lot of customers in those kinds of industry segments.”