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MTV-RNWK Music Venture: The Financial Details; Cash Plus $230 Million Note From MTVN

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imageRealNetworks (Nasdaq: RNWK) has a 5 PM EST conference call planned to discuss the financial details of the new JV company, but it just filed an 8-K with details. Real will get 51 percent, while MTVN will get 49 percent of the new company. Other details (pic on the right: Rob Glaser, CEO of RealNetworks, John Stratton, SVP of Verizon Communications and Van Toffler, president, MTV Networks’ Music/Logo/Films Group).
— Rhapsody America is to operate primarily in the United States, although the parties are not precluded from expanding the territory in the future by mutual agreement.
— The assets contributed by Real generally consist of its Rhapsody service subscribers, a cash contribution, certain employees, contracts, revenue from existing Rhapsody subscribers, marketing materials, player hardware, and related URLs, and distribution arrangements. Real will also license certain assets to Rhapsody America, including Rhapsody content, the Rhapsody brands and related materials.
— MTVN will contribute cash, a five-year note for $230 million and other assets, including its existing URGE subscribers and marketing materials. MTVN will also license certain assets to Rhapsody America, including URGE content, brands and related materials. Rhapsody America is obligated to purchase $230 million in advertising on MTVN cable channels, and will receive additional integrated marketing, over the term of the agreement, which I suppose is what the note it.
— Rhapsody America will be governed by a joint committee comprised of four members with two members appointed by each of Real and MTVN.
— In case the JV company is sold, and if a portion of the purchase price for MTVN

2 Responses to “MTV-RNWK Music Venture: The Financial Details; Cash Plus $230 Million Note From MTVN”

  1. Bah.

    So, other than a zero-sum transfer of marketing dollars between the two companies, does this new venture in any way drive the state of the art forward? What unique and revolutionary aspects of this new service are going to drive millions of iPod/iTunes users to drop a perfectly good system for one backed by two serial failures of the digital age? Revs. of $2-3 million? iTunes does that for lunch hour.

    We'll be reading the obit of this latest venture in a year.

  2. Apple should buy Real. It can be had for around $1b. For that, you get a) $500m in revs, b) $500m in cash, c) 2.7m paying, recurring customers, d) a ton of free and paid content to move on over to QuickTime and e) a subscription music service to round out the iTMS offering. And Steve and Rob making up makes for good headlines. Kudos to Real for outlasting its reason for being. Let's put the Real client out of its misery once and for all.