In the movie classic The Goonies, the neighborhood kids ventured down into the basement and were greeted with a loud groan. Afraid, one asked, "What was that?" Even more frightened, another responded, "It sounds like Kong." It wasn't the famous giant gorilla then, but digital media producer Avid Technology (NASDAQ:AVID) is getting a hand -- a big one -- from King Kong now.

Over the summer, the blockbuster Batman Begins bore Avid's digital imprints. More recently, Peter Jackson used Avid for post-production work on the remake of King Kong. The University of Southern California is using Avid's systems to prepare students for editing work, and its SoftImageXS system was used in bringing more lifelike graphics to the popular Half-Life 2 video game. ESPN's highly publicized X-Games use Avid-owned Pinnacle Deko systems as part of the broadcasting process. Without question, Avid is the king of digital media content, and the sounds of Kong can be heard in its latest report.

The company blew past analyst revenue estimates of $192.2 million. It reported net sales of $204.4 million for the third quarter, 38.7% higher than the same period a year ago. While we don't have a segment revenue breakdown in its newest report, no doubt the Pinnacle acquisition is having a substantial effect. CEO David Krall said he's pleased with the integration of Pinnacle's Deko and MediaStream products into its broadcast lineup.

The Pinnacle acquisition is a long-term positive for the company, but not without short-term costs. The effects of these expenses were seen throughout the report. The net result is that in the quarter, Avid lost $0.46 per share on a GAAP (generally accepted accounting principles) basis, compared with net income of $0.54 per share a year ago. However, since the loss is attributed to one-time costs, shareholders shouldn't expect it to become a pattern.

Investors are banking on big things from Avid, as evidenced by the stock rising 13% after the earnings release. One item that shareholders will want to monitor is its profitability. Even using the non-GAAP numbers (which exclude the various one-time costs), gross margins for the quarter declined 3.2 percentage points from last year to 54.2%. Shareholders will want to track this measurement to see if it becomes a negative trend.

This aside, the Pinnacle acquisition has already made the King Kong of digital media content that much bigger. And Avid's rule-making position in the industry should certainly be good news for long-term investors.

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Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.