RealNetworks to Acquire Listen.com

Apr 22, 2003


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RealNetworks, Inc. has entered into a definitive agreement to acquire Listen.com, Inc. in a cash and stock transaction valued at approximately $36 million. With this acquisition, RealNetworks will own two Internet subscription content services, the RealOne SuperPass, which offers news, sports, and entertainment programming, and the RHAPSODY music service. Listen.com's RHAPSODY subscription service, music and artist information, and radio service will be important assets in building the music offerings of RealNetworks' RealOne subscription service. 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. 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 of 2003, subject to California Fairness Hearing Approval. All consents from the major music labels have already been granted. 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% of RealNetworks' shares outstanding. If the transaction were valued as of the close on April 18th, the total purchase price would be approximately $36 million. Depending on the timing of obtaining California approvals, the impact of this acquisition may be reflected in RealNetworks' 2nd quarter financial results. Following the close of the acquisition, RealNetworks would expect Listen.com to incur operating losses of approximately one million to two million dollars per quarter in 2003, and decreasing thereafter. As part of the agreement, Listen.com's executive and management team will be joining RealNetworks. Sean Ryan will continue to lead the Listen.com team as vice president of music services as part of the RealOne division, directed by Merrill Brown, senior vice president, RealOne Services. Rob Reid, founder of Listen.com, will join RealNetworks as vice president of strategic development. Listen.com will remain in San Francisco and will continue to operate music services for its customers and distribution partners.

(http://www.realnetworks.com)