DVD Maker Bought as Industry Spins Into Boom Times

By ANDREW SIMONS

Orange County Business Journal

Looking to boost its capacity to replicate CDs and DVDs, privately held Crest National has acquired Anaheim-based Concord Disc Manufacturing Corp.

Terms of the deal weren’t disclosed.

Concord, which replicates CDs and DVDs, prints labels and makes packaging for discs, has a sizeable plant in Anaheim and that was a big factor in the decision to buy.

The Concord buy “immediately doubles the size of our DVD and CD replication operation, nearly quadruples our automated packaging capabilities, and it enables us to greatly expand our hand-packaging services,” said Ron Stein, Crest National president. “Additionally, it provides sufficient space to bring distribution and fulfillment turnkey services in-house.”

Crest National was founded 42 years ago and has five facilities in Hollywood, including a motion picture film lab, a digital video post production operation, two DVD design and encoding studios and a DVD and CD replicating plant.

Concord started in the 1980s as a maker of computer floppy diskettes. By 1998, the company was making CDs. A few years later, Concord started replicating DVDs.

The disc replication industry could see its share of challenges in the coming years. Among the biggest concerns: obsolescence.

In three to five years, DVD buyers could be downloading movies via cable, satellite or other service providers just as they do today with music downloads over the Internet.

This was a concern for Steve Arthur, an analyst at RBC Capital Markets, when he recently initiated coverage of Toronto’s Cinram International Inc. a rival of Concord’s with a “sector perform” rating.

He advised investors to not be long-term shareholders of Cinram, which closed a 300-worker, 218,000-square-foot compact disc replication plant in the same Anaheim industrial park in 2001.

Crest executives dispute projections of a meltdown.

“As far as online competition goes, there’s been real issues with bandwidth,” said John Walker, Crest’s vice president of sales and marketing. “We don’t see it being a big impact in the foreseeable future. People want to own DVDs and hold the packaging.”

Price erosion in the DVD market has put pressure on Concord and other disc makers in recent years, forcing consolidation in the industry.