Breaking: RealNetworks Acquires Listen.com

RealNetworks has acquired the critically-acclaimed online music service Listen.com (with its Rhapsody music service) in a cash and stock transaction valued at approximately $36 million. The acquisition follows RealNetworks’ strategic investment in Listen.com announced in February.

Following the close of the acquisition in Q2 or Q3 of this year, RealNetworks expects 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 management team will be joining RealNetworks. CEO Sean Ryan will continue to lead the Listen.com team as VP of music services as part of the RealOne division. Rob Reid, founder of Listen.com, will join RealNetworks as VP of strategic development. Listen.com will remain in San Francisco and will continue to operate music services for its customers and distribution partners.

The key phrase here is “distribution partners”: in a short time, Listen.com has gained some big ground, both in terms of the number of paying subscribers as well as critical acclaim. It was the first music service to have streaming/downloadable music from all the five major labels. For Real, that means the ability to tap into those consumers and perhaps upsell its own services, and potential partnerships with Listen.com’s 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.

CONFERENCE CALL IN 30 MINUTES: Real will host a conference call at 5 PM EST today, with details on the acquisition, online.

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