Publishers find software appealing ADD TIMES MIRROR TO LIST OF SOFTWARE INVESTORS

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In a bid to move quickly into the software realm, Times Mirror Co. purchased a minority equity position in privately held Digital Pictures, a pioneer developer of products for the Sega CD system.

The move comes as traditional print giants awaken to new possibilities in the digital world. Many publishers now seem to be hunting for the right software partner to serve as a guide along the electronic frontier.

"It's become more and more of a necessity for print companies to get into this area," said Thomas O'Reilly, editor of newsletter Multimedia Business Report. "Buying your way in is a quick fix to get into the industry."

"Publishers are starting to realize that interactive media can deliver a new kind of vehicle to consumers that will be of much greater interest to advertisers," said Tom Zito, president-ceo of San Mateo, Calif.-based Digital Pictures.

This is Times Mirror's third venture in software in recent months. Last month, the company acquired Ehrlich Multimedia, a Park Ridge, N.J.-based software developer of CD-ROM products for schools and homes. And earlier this year, it purchased Allen Communications, Salt Lake City, a developer of multimedia software for industry training.

Times Mirror Exec VP Curtis Hessler said the company hopes to "have a close affiliation with three to five creative software houses to get as much diversity as possible."

Times Mirror also is moving aggressively in other areas of interactivity. The company has an agreement with Prodigy Services Co. to develop regional online news services, and its flagship Los Angeles Times is working with Pacific Telesis Group to create electronic shopping services.

Other publishers are equally intrigued by computer software companies.

Tribune Co. last July paid $52 million to acquire Carlsbad, Calif.-based Compton's NewMedia from Encyclopaedia Britannica.

Earlier this month, U.K. publisher Pearson announced it would acquire Novato, Calif.-based Software Toolworks for $462 million, while Paramount Publishing formed a joint venture with Davidson & Associates, a Torrance, Calif., software company.

Hearst Corp. in February purchased a minority stake in Books That Work, a Palo Alto, Calif., software company.

And Random House and Broderbund Software, Novato, Calif., formed a joint venture last fall, called Living Books, to market multimedia children's books. Living Books this month acquired the rights to the Berenstain Bears and Dr. Seuss series.

Terms of the deal involving Times Mirror and Digital Pictures were not disclosed, but Mr. Zito valued it at over $10 million. Mr. Hessler said a portion of the money is earmarked for a minority equity position in the company, while the remainder will be used to finance future joint ventures.

"We hope to be shipping our first CD-ROM products by Christmas," Mr. Hessler said. On the drawing board are a series of products that play off Times Mirror's existing newspapers, magazines and professional publishing ventures, he said. In addition to the Los Angeles Times, Times Mirror's print properties include Newsday, Field & Stream and Outdoor Life.

For Mr. Zito, an ex-newspaperman turned high-tech entrepreneur, the deal represents a return to familiar medium. From 1970 to 1983, Mr. Zito was a reporter with The Washington Post. He left to pursue the high-tech dream in Silicon Valley and three years ago founded Digital Pictures. Over the past two years, Digital has sold nearly 750,000 copies of its "Sewer Shark" game for Sega CD systems.

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