North By Northwest Productions Inc., a Spokane company best known for making movies, has bought part of a small web-design company and formed a new company, North By Northwest Interactive LLC.

The move is designed to help North By Northwest position itself better to serve the melding video-production and online-services markets, company executives say.

North By Northwest completed its acquisition of a minority interest in DiMedia Marketing Inc. earlier this month. Along with DiMedia founder Jason Miller and co-owner Shawn Bendinelli, the company's owners have formed North By Northwest Interactive, which offers website design and other online services.

Miller declines to disclose the terms of the transaction, but says he and Bendinelli own 52 percent of North By Northwest Interactive. The new company is located in North By Northwest's headquarters building, just north of downtown Spokane at 903 W. Broadway, and is working with the company's commercial division, which produces conventional commercials and long-format corporate videos.

North By Northwest President and CEO Rich Cowan says, "We see a lot of growth potential when you combine the skill set of interactive with the commercial division. You're going to see a convergence of those two things down the road."

Randy Kron, a partner in North By Northwest who is involved in its commercial division, says that in recent years, the company has witnessed a shift within its industry: Its customers still need video production, but they are using it differently than they once did.

"They are doing the same amount of video work, but they are pushing more of it to interactive (online)," Kron says.

He says the company's owners have talked for a number of years about adding website design and other online services to its offerings, and decided last year to pursue DiMedia.

"Bringing these guys on board is like, add water and they are going to grow," Kron says.

Miller says North By Northwest Interactive offers website design, email-marketing campaigns, social-media consulting, and some assistance with mobile applications. He says he and Bendinelli found the merger idea attractive because of the name recognition and corporate structure North By Northwest has in place.

Founded 20 years ago, North By Northwest currently has 35 employees, 26 in the Spokane office, including Interactive, and 11 in a Boise office. The company has five divisions: entertainment, which makes full-length feature films; nonfiction, which makes documentaries and documentary-style films for universities and other institutions; commercial; distribution; and now interactive.

Kron says the commercial division currently is the company's largest in terms of number of full-time employees, but entertainment is the largest revenue generator. While making a movie, the company will hire dozens of contract employees who might work from a day to several months on any given project.

Cowan declines to disclose the company's annual revenue, but says the company is fiscally conservative and has a "consistent" bottom line.

He says the company made five movies last year, each with a budget ranging from $2 million to $8 million.

Cowan says most of the movies the company makes are designed to go straight to DVD or cable television. The company currently is negotiating on its next movie, though he declines for now to disclose details about it. He expects the company to make four or five movies this year.