RealNetworks To Buy Listen.com22 Apr, 2003 By: Hive News
RealNetworks, Inc. will buy music download service Listen.com in a cash and stock transaction valued at approximately $36 million, adding to its entertainment media portfolio.
The acquisition means RealNetworks will add Listen.com's Rhapsody music service to its proprietary subscription content under the RealOne SuperPass banner, which offers news, sports and entertainment programming.
"RealNetworks has long been a pioneer and leader in digital music, going back to our invention of Internet streaming in 1995 and introduction of RealJukebox in 1999. The opportunity for us to add Listen.com's Rhapsody…into our family of services was just too compelling to pass up," said CEO Rob Glaser. "Rhapsody has pioneered a number of important capabilities such as integrating artist guides and customized radio stations within a music subscription service and its innovative hybrid streaming and caching technology. Bringing Rhapsody and RealOne together will, we believe, accelerate the adoption of legitimate digital music services."
Listen.com has music assets that will enhance RealNetworks' music programming and provide operational efficiencies. In addition, Listen.com's distribution arrangements and technology partnerships with broadband cable and DSL providers, online music sites, computer manufacturers and consumer electronics companies will enhance the reach of RealNetworks' subscription offerings, a spokesperson said.
Listen.com has distribution agreements with a network of more than 15 companies, including Time Warner Cable's Road Runner high-speed ISP, Charter Communications, Verizon Online, Sprint, Cablevision Systems Corporation's Optimum Online, Gateway, Lycos, RCN Corporation and Sony's Musiclub.
The acquisition follows RealNetworks' strategic investment in Listen.com announced in February. The parties expect the acquisition to close late in the second quarter, or early third quarter, subject to California Fairness Hearing Approval. All consents from the major music labels have already been granted, the spokesperson said. The cash consideration to be paid for stock and vested stock options of Listen.com is approximately $17.3 million and the stock consideration is approximately 4.1 million shares of RealNetworks common stock. These shares represent less than 3 percent of RealNetworks' shares outstanding. If the transaction were valued as of the close on April 18, the total purchase price would be approximately $36 million.