Archive for Napster

Digital Media M&A

Posted in Deals, Digital Media, News with tags , , , , , , , , , , , , , , , , , , on September 19, 2008 by Dave Liu

Google Acquires Korean Blogging Software Company TNC — Google has bought Korea-based blogging software provider TNC, co-founder and co-CEO Chang Kim said in a blog post on Web20Asia.com (via Venturebeat). Terms weren’t disclosed. The company’s full name is Tatter and Company. Kim compares TNC to Matt Mullenweg’s Automattic – “a company that develops a cool blogging platform” that’s favored by “the nation’s A-list bloggers and also works closely with the open source community.”

The Next Chapter: Best Buy To Acquire Napster For $121 Million — Napster has fallen into the arms of a surprise buyer: Best Buy. The big-box electronics giant will pay $121 million or $2.65 per share. Shares of Napster closed at $1.36 on Friday, so this is nearly double for those die-hards that have held on for the long ride down. Sale chatter had picked up in recent months, in part because the company’s share price was approaching the cash it had in the bank –and in fact, Best Buy is only paying $54 million, once you net out Napster’s cash and short-term inv*stm*nts. Napster had been involved in an unusual proxy fight with three individual shareholders, and in a recent statement on the matter, it gave a heads up that it was open to a sale.

WebMD Buys QualityHealth For Up To $75 Million — The consolidation in the online health market continues: WebMD (NSDQ: WBMD) is buying online health info site QualityHealth.com and its owner Marketing Technology Solutions (MTS) for $50 million. Another $25 million could be earned based on performance in 2009.

GigaOmniMedia Makes Second Blog Buy: The Apple Blog — Om Malik’s blog network GigaOmniMedia has made its second acquisition… it has acquired The Apple Blog, which exclusively covers one of the blogosphere’s favorite companies. The deal comes not long after the acquisition of mobile-focused site jkOnTheRun. Terms of the deal, which should probably be described as an acq-hire, were not disclosed. The site is edited by Josh Pigford, who started it back in 2004. The acquisition follows closely on the news that Om would give up the CEO job and take a position as a partner at True Ventures, the VC firm with an investment in his network. In that announcement, he said that adding new blogs was a key part of the plan going forward.

WPP Digital Acquires Minority Stake in Proclivity Systems — WPP Digital has acquired a minority stake in online analytics provider Proclivity Systems, Brand Republic reported. The New York-based firm looks at consumers’ e-commerce habits, which is used by its clients to target merchandise and marketing efforts. WPP Digital, the investment arm of the ad holding company, followed Fung Capital USA investments, which was the lead investor in the unspecified funding round. The two were also joined by the Pilot Group as a stakeholder in Proclivity Systems. Back in April, WPP Digital took a minority stake in Chinese rich media ad delivery outfit HDT Holdings Technologies and in August, the ad company purchased a 12.82 percent share of IGA Limited, the Cayman Island-based parent company of InGame Ad Interactive Technology.

Bestofmedia Acquires IT Site Computing.net — French tech publisher Bestofmedia raised $35 million earlier this summer, and now it’s spending some of it… The parent of Tom’s Guide has acquired Computing.net, an IT info and support site. The site, which was founded back in 1996, is now under the Tom’s Guide brand. The announcement is a bit cagey on how big Computing.net is: Bestofmedia says it now reaches 30 million readers following the deal; in July the company said it had 25 million readers, so that gives some idea. Expect more deals, as the company aims to become “the number one ranked privately-held online media publisher for technology worldwide by 2011.” Terms of this acquisition were not disclosed.

Media Rollup Firm Tsavo Buys Online Marketing Firm Better — Tsavo, the new media rollup firm backed by American Capital, has now bought El Segundo, Ca-based online marketing and SEO firm Better. Founded in 2004, the company provides a variety of services ranging from SEO and PPC management to clients such as Paramount, DreamWorks and Closet World. Better’s founder Ben Padnos had previously worked at Yahoo and launched a collegiate online sports network, FANSonly.com, as part of another company which was later acquired by Viacomand rebranded as the CBS College Sports Network. More details here. We reported last week that Tsavo took over select assets of MoxyMedia, the Canada-based online media firm, which also had backing from American Capital.

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , on September 2, 2008 by Dave Liu

Google To Launch New Web Browser Chrome Tomorrow; Open Source — Update: Google has posted about the new browser on its official blog, and it has posted the comic-book describing the browser online here.. It will launch tomorrow in about 100 countries. From the post: “What we really needed was not just a browser, but also a modern platform for web pages and applications, and that’s what we set out to build…Under the hood, we were able to build the foundation of a browser that runs today’s complex web applications much better. By keeping each tab in an isolated “sandbox”, we were able to prevent one tab from crashing another and provide improved protection from rogue sites. We improved speed and responsiveness across the board. We also built a more powerful JavaScript engine, V8, to power the next generation of web applications that aren’t even possible in today’s browsers.” For now, this is Windows version only, and Google is working on Mac and Linux versions too.

Google Ramps Up Madison Avenue Charm Offensive; Agency Reaction Remains Mixed — At best, Google’s attempts to woo agencies and convince account teams that the search giant’s ad moves will not undercut them are getting mixed reviews, a NYT piece suggests. Of course, in some cases, almost nothing will soothe the ire of those like WPP CEO Sir Martin Sorrell, who has only marginally softened his view of Google in recent months—that is, if you consider calling Google a “froe” instead of a “frenemy” is a sign of endearment. Over the course of a year, Google has formed a 40-person contingent charged with working some diplomatic magic with the agencies. The team’s goal is to coax agencies into getting their clients to purchase search ads, YouTube video spots, DoubleClick display ads and other Google products. And so, Google has dispatched the team in the form of a traveling agency show called Campus@, where Google demonstrates new products like its recently released Ad Planner. The presentations resemble the TV network upfronts of past years, with fr*ee food and prizes.

Eric Schmidt: Google-Yahoo Deal On For October — Various state and federal regulatory bodies are still looking into Google’s ad relationship with Yahoo, but CEO Eric Schmidt says the deal is on for October. Schmidt made the remarks in an interview with Bloomberg, while in Denver hanging out at the Democratic National Convention. That regulatory body may seek to block the deal has been a remote, but possible obstacle since it was announced in early June. The companies have always maintained the opinion that they don’t need regulatory approval to go ahead, but that they wanted to give regulators some time to voice any objections now. From the beginning, Google and Yahoo have said they’d wait 3.5 months, about 100 days, to go forward. Meanwhile, in addition to potential trip ups from domestic regulators, Canada’s Competition Bureau is looking into things as well. Fortunately, the companies don’t have to get the blessing of the EU’s hard-nosed regulators, since the agreement only applies to ads served up in the US and in Canada.

Napster: ‘We’re Open To A Sale’; Vote No On The Ice Cream Franchisee — Troubled online music retailer Napster has hired UBS (again) to explore strategic alternatives, including a possible sale. The news was made in a letter to shareholders, urging them not to vote for three outside activists, looking to get representation on the board. In the letter, the company notes that the candidates’ previous work experience—musician, nursing home executive, ice cream franchisee, middle management banking executive—is “irrelevant to a company like Napster.” It also notes that contrary to suggestions, it is open to a sale if that turns out to be the best option. If this all sounds familiar, it is. The company said exactly two years ago that it had retained UBS to explore strategic alternatives. Unfortunately for shareholders, who have seen the stock decline precipitously, that didn’t go anywhere. The difference this time: The stock has gotten so low—trading close to cash, even—that it would be a cheap pickup for many companies. In the meantime, Napster is still doing what it can to breathe some life into its business. It recently launched an ‘everything must go’ sale, temporarily slashing prices on its core service by nearly 50 percent.

Yahoo Shutters Social Net Site Mash — Yahoo is closing down its one-year-old social networking site, Yahoo Mash. The site, which has been in private beta, will shut down Sept. 29. In a post on the site, via the Atlanta Business Chronicle, Matt Warburton, Yahoo Community Manager, writes that the company may have accidentally contacted non-Mash members about the site’s demise. No word was given as to why Yahoo was abandoning the project. As for the actual users—the number of those taking part in the test was not immediately clear—all of the content on their Mash profile will be unavailable after next month. But Warburton said those who have an account with Yahoo 360, the company’s current social net portal, will not be affected. Elsewhere, Yahoo says that users’ 360 profiles will be transitioned to a new system sometime in the second half of the year.

Russian Search Firm Yandex Delays IPO Till Next Year — Yandex, the big Russian search engine, has delayed its much-anticipated IPO until next year, according to local reports. Earlier this year reports came out that Yandex was planning a US IPO and will seek to raise $1.5-$2 billion, at a total valuation of $5 billion. For 2007 Yandex’s revenue was up 130 percent to $167 million from $73 million in the year-ago period. The timeline was expected to be about late fall this year, but with the market conditions being what they are, it is now expected to be next year. All this while, the company hasn’t officially announced anything on the IPO.

Hulu Vs. YouTube — It’s no secret that Google’s YouTube is under-performing in the advertising department. Forbes estimates that YouTube’s ad revenues will reach $200 million this year and $350 million in 2009, while Citi analyst Mark Mahaney thinks the video giant can make $500 million next year if it does a better job selling display ads Even so, TechCrunch contributor Don Reisinger says the question marks continue to hang over YouTube, especially compared to Fox and NBC’s joint venture, Hulu. Hulu served about 88 million videos in May, compared to 4.2 billion for YouTube, but the old media startup has the advantage of being able to serve ads on the vast majority of its videos, whereas YouTube can only serve ads against a paltry three percent-or 126 million videos per month. This, Reisinger points out, nearly levels the playing field. In fact, according to one estimate, Hulu could rake in as much as $90 million in revenue in its first year, which roughly equals YouTube’s domestic revenue. And Hulu largely caters to an American audience, anyway.

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , on August 12, 2008 by Dave Liu

Analysts Question Google’s Strategy — Following Google’s announcement last week that its stake in AOL had significantly lost value, analysts were left pondering Google’s strategy beyond search. In an SEC filing, Google acknowledged that AOL was probably worth closer to $10 billion than the $20 billion valuation the search giant placed on the Time Warner company when it bought a five percent stake in 2005. Trip Chowdhry of Global Equities Research said Google has shown a knack for overpaying for its investments, citing the Web giant’s AOL stake, its YouTube purchase, and the recent acquisition of DoubleClick. Meanwhile, Chowdhry noted that internal projects like green energy, space exploration, and a new mobile operating system have also failed to bear fruit. “Other than search, what has Google done right? They have 1,001 products in beta, but what’s been successful?” Chowdhry asked. “There has been a sequence of missteps and failures, and this is not the end. They miscalculated the valuation of AOL, and this is the first time they’re admitting to it.”

Buyers Not Supporting Google-Yahoo Deal — In the next month, the Department of Justice will decide whether to block the search advertising deal Google struck with Yahoo in June. If everything goes according to plan, Google will begin selling ads on Yahoo Search in early October. In the meantime, the DoJ is soliciting input on what the deal would mean for the ad industry, and while Microsoft’s stance is well-known, it’s more notable-and perhaps, more surprising-that many big advertisers do not support the deal, either. “We’re concerned about the Yahoo! deal,” said Rob Norman, CEO of WPP-owned GroupM North America. “For advertisers to prosper, they need competitive markets. We think Google is a fantastic company. Our sense is that if the transaction with Yahoo! proceeds, there’s the potential the development of Panama and other competing systems will atrophy over time.”

Olympics Fuels Ad Spend Boom In China — Thanks to the Beijing Olympics and the growing strength of Chinese consumers, ad spending in China is expected to grow more than 20% this year to $35 billion, according to a new study from GroupM. The Internet–which is expected to command 7.3% of ad investment this year, and 8.5% next year–is China’s fastest-growing medium, and is on track to become the second-largest ad medium after TV within a few years, according to the study.

IAC Spinoff Set For Next Week; Five Companies As Of Aug. 21 — IAC finally has set the date for its long-awaited split into five separate companies to take place: Aug. 21. Before that, the “when-issued” trading period in the common stock of HSN, Inc., Interval Leisure Group, Inc., Ticketmaster and Tree.com, Inc. and IAC will happen Tuesday, Aug. 12. The trading will occur on a post-distribution basis and, in the case of IAC, a Board approved post-one-for-two reverse stock split, basis, under the symbols “HSNIV,” “IILGV,” “TKTMV,” “TREEV” and “IACIV,” respectively. The “when-issued” trading period comes following the SEC declaring the S-1 registration statements for each of the spincos effective, and will continue up until the spin-offs. Shares of IAC common stock will also trade on a regular way basis during the period under its existing symbol, “IACI.”

Earnings: Liberty Interactive Q2 Revs Climb 9 Percent; Open To Deal For AOL Access — Liberty Media president and CEO Greg Maffei said that the company sought to “take advantage of market weakness” in Q2 and so repurchased 18.1 million shares of Liberty Capital, reducing outstanding shares by 14 percent. In terms of the company’s Q2 performance, the Interactive group’s revenue increased 9 percent as adjusted OIBDA increased 4 percent. The company cited growth at QVC and Provide Commerce. The acquisitions of Backcountry.com and Bodybuilding.com in June 2007 and December 2007, respectively, also provided a year-over-year boost. Other highlights from the quarter included: Starz Entertainment revenue was up 8 percent to $275 million and adjusted OIBDA increased 24 percent to $68 million. The unit’s operating expenses increased 4 percent due to increased SG&A expenses associated with a new Starz branding campaign. Liberty Capital group’s revenue increased 33 percent to $174 million. Through the DirecTV (NYSE: DTV) share buyback, Liberty’s ownership of DirecTV increased to over 49 percent, though voting control remains at 48 percent per a standstill agreement.

Napster Q2 Revs Fall; Paid Subs Drop Sharply — Struggling online music player Napster has reported Q2 revenue of $30.3 million, a decline of 5.9 percent from $32.2 million a year ago. Net loss was fairly flat at $4.3 million ($.10 per share) compare to a loss of $4.2 million ($.10 per share) a year ago. The company said it had 708,000 paid subs at the end of the quarter, a decline from 760,000 at the end of Q1. The company also touts good results from its new MP3 store, but it’s hard to get a grip on what these numbers actually mean: ”The introduction of MP3’s into our line-up has created positive trends for Napster with increases to visitation and user engagement. In addition, track sales per subscriber were up 10% in July, month over month, with total track sales up 5% during the same period.” For the coming quarter, the company sees revenue of about $30 million again. In its 10-Q filed along with the release, the company explains the declining subscriber rolls (sort of): “Paid subscribers at June 30, 2008 were approximately 708,000 compared to 761,000 at March 31, 2008. This decrease occurred because new added subscribers were not sufficient to offset our normal cancellations during the period.”

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , , on July 21, 2008 by Dave Liu

IAC Successfully Places $2 Billion In Debt; Will Have $1.3 Billion To Invest Internally And In Deals — This was expected, but still you can’t take anything for granted in this environment: IAC said this afternoon that it has successfully raised about $2 billion in debt, associated with its spinoff plan. Specifically, the company raised $840 million through bonds and another $1.15 billion through senior notes. IAC CFO Tom McInerney touted the raise as evidence of health at Interval, HSN and TicketMaster (Lending Tree, the weakest of the units is not incurring any debt, and will in fact be given cash). The announcement has the exact breakdown of debt between each unit. After the dust settles, IAC will have about $1.3 billion to invest internally and in new acquisitions, according to McInerny. Technically, the money will be received upon completing some paperwork and other technicalities over the next several days. Meanwhile, in a new note put out today, Doug Anmuth offered some reactions following meetings with IAC management.

Updated: Yahoo Unveils Proxy Page — In a filing with the SEC, Yahoo notes this morning that it has put up a new proxy page at proxyfacts.yahoo.com with the following banner. It pretty much speaks for itself. Update: Per a separate filing, Jerry Yang even made an internal video for Yahoo touting a full campaign to win the vote: “With one of the largest audiences on the Internet, we’re taking full advantage of the power of our network to remind our stockholders why voting for Carl Icahn’s board of directors is a bad choice.”
Of course, with Legg Mason announcing its support of the incumbents, the company is the favorite to hold on.

Analysts On Google: This Quarter Wasn’t So Bad; Long-Term Outlook Still Strong — We’ll see if Google shares get clipped as badly in today’s trading as they did after hours yesterday… so far it looks like justice may be a bit less severe. Either way, it was not one of its great quarters. The key question: what does it mean for its long-term outlook? Analysts are chiming in with their view, and most remain pretty positive: Doug Anmuth, Lehman: The online ad market is showing cracks, no doubt, between Google, Microsoft (NSDQ: MSFT), ValueClick (NSDQ: VCLK) and BankRate, but Google is in the best position of all. He noted that Google’s income fell short in part due to lower interest income on its cash pile (which was noted in the release and discussed further in the call).

Facebook Sues German Knockoff Site StudiVZ; Will Others Follow? — Updated below: Facebook has finally started taking action against its knockoff sites, and has first sued the one most easily accessible in terms of regulatory laws: it has filed a copyright lawsuit against StudiVZ, a German social network which looks very similar, and accuses it of “copying the look, feel, features and services” of the Facebook site, reports FT. The lawsuit was filed in a California court. It says that any differences between the two sites were “nominal” and accused StudiVZ of merely “replacing Facebook’s blue colour scheme with a red one”. The German company that claims 10 million users and calls itself “the most successful social network in Germany, Austria and Switzerland”. Facebook launched a German version a few months ago, but has struggled to gain traction there, the story says. StudiVZ was bought out by Holtzbrinck group, the German publishing giant, for a reported $112 million late in 2006.

Speculation Continues on Napster’s Fate; Could Be Bought By, Well, Anyone — The speculation about Napster’s fate has been going on ever since it relaunched under the new management, and once again, some new fuel to it: Bloomberg did a piece earlier today, noting that company could become takeover bait for hedge funds as its cash on hand exceeds company’s market cap, with stock continuing to plunge lower and lower (it reached a record-low $1.05 on July 16, but had a run up today becuase of the story). While Napster hasn’t posted a profit in four years, its $69.8 million in cash and inv*stm*nts as of March 31 eclipsed the shares’ $52.1 million value before today, it notes. CEO Chris Gorog has built up cash by slashing sales and marketing expenses by 90 percent to $18 million in the fiscal year ending March, while revenues rose 15 percent to $127.5 million.

ValueClick To Launch Predictive Behavioral Targeting — ValueClick Media, a division of ValueClick, Inc., is expected to announce the launch of its Precision BT suite today at the OMMA Behavioral conference in San Francisco. The suite combines access to anonymous consumer online behavior with a predictive technology to create a scalable behavioral targeting solution available to marketers via two products: Precision Retargeting, an enhanced version of the user retargeting capabilities offered by ValueClick Media since 2005, and Precision Profiles, which uses a proprietary predictive algorithm to identify a marketer’s best prospects in hundreds of consumer interest segments.

AOL Health Adds Content Partners — Expanding its editorial scope, AOL Health has partnered with a trio of health sites to add elder care information, doctor listings and other health-related articles and video. The site’s new content partners include Caring.com, HealthCare.com and Health.com, the online presence of Time Warner’s Health magazine, which will supply articles, quizzes, image galleries and videos.